The magnetic compass is the simplest form of compass. The ordinary pocket compass has a magnetized needle mounted on a pivot so that it swings freely above a dial. The needle comes to rest in line with the earth's magnetic field at the place where the compass is used. The lines of force of the earth's magnetic field run between the earth's magnetic poles, in a roughly north-south direction. However, a magnetic compass at a given location will not necessarily point to a magnetic pole because the lines of force follow an irregular path. In a large area surrounding each magnetic pole, the lines of force are perpendicular to the earth's surface and a magnetic compass is useless.

A magnetic compass by itself is useful in determining the direction of one landmark relative to another. In general, true north (or south) can be computed from a compass reading only when the exact direction of the lines of force is known for the location at which the compass is being used. The angle between magnetic north (or south) and true north (or south) is called declination, or variation. The declinations over a given region are determined by magnetic surveys and are published on charts. These charts are regularly updated because the orientation of the lines of force of the earth's magnetic field at any given place slowly changes with time.

An error in a compass reading caused by local magnetic fields, such as those produced by an airplane's electrical equipment or the magnetization of a ship's hull, is called deviation. Deviation can be corrected by installing magnetic devices to counteract the magnetic attraction of nearby objects.

consists of a round card, called a compass card, with several parallel steel magnets attached to the underside, and a steel pivot at the center. The compass is mounted on a series of rings in such a way that the dial (compass card) remains horizontal, no matter how the ship may pitch and toss. The rings, called gimbals, and compass are placed in a box called a binnacle. On the binnacle, a vertical line called the lubber line marks the direction in which the ship's bow is pointed. The person who steers the ship keeps on course by aligning the lubber line with the compass card point that marks the heading the ship is to follow.

also is called the earth inductor and magnetic-induction compass. It indicates magnetic north accurately when as close as 300 miles (480 km) to either of the earth's magnetic poles. The ordinary magnetic compass is useless within 1,200 miles (1,900 km) of either pole. The induction compass is operated by small electric currents set up in a coil of wire when it is moved through the earth's magnetic field. Currents from two coils of this kind are amplified and used to move the direction-pointing element of the compass.