There are a few different methods for describing the direction you and your compass are facing. Mariners use a slightly different system than aviators, and the military has its own system. Here I will focus on the most useful ways of describing directions for land navigation with a handheld compass.
The first rule of compass directions is to remember that no matter what letters and numbers you see at the top of the compass dial, or which way you are facing, the red end of the compass needle always points toward the north magnetic pole. This sounds easy enough to remember, but when your head is foggy because of lack of sleep, cold temperatures, or panic, you can become easily confused. Practice just watching the compass needle to see which direction is north.
By default, the other end of the needle points south. East and west are more easily confused. You have to remember that east is right of north, and west is left of north. If you have problems remembering these directions it might be helpful to memorize the directions in the order they would appear if you turned in a circle. Starting at north, you could make a ¼ turn clockwise to east, another ¼ turn to south, another to west, and another back to north. Memorizing the phrase “Naughty Elephants Squirt Water” might help you remember the sequence of directions as you turn clockwise in a circle.
These four directions (N, E, S, W) are the cardinal directions and they lie at 90 degree angles to each other. The intermediate directions of NE, SE, SW, and NW are at 45 degree angles to the cardinal directions. For modern land navigation purposes the intermediate directions are used only for rough approximations. For example you might tell someone that you will be following a stream that flows NW until you reach the waterfall shown on your map and then you will climb the ridge to the SW and follow it downhill to the road. Someone with a compass and/or a map could follow your route very easily with this information.
More precise compass directions are described with numbers or number and letter combinations called a bearing. Two common methods of describing a bearing are the quadrant method and the azimuth method
The quadrant method breaks the compass dial into two hemispheres, north and south, and then describes how far toward either east or west you are facing. A description of a direction always begins with either N or S, followed by a number of degrees and then the letter E or W. For example, N 40° E is a direction that is 40° east of north. S 45° W is exactly due southwest. South 85° East is just 5° south of due east.
The azimuth method is easier to use. The compass circle is broken into 360 increments or degrees (°). North is 0°, East is 90°, south is 180°, west is 270°, and north is 360° (or zero). Describing a direction is as simple as saying one number. For example, a direction of 40° using the azimuth method is the same as N 40° E using the quadrant method. A direction of 225° is equivalent to a quadrant direction of S 45° W, and an azimuth of 95° is the same as a quadrant bearing of South 85° East.
Some compasses have a dial with quadrant degrees, others have an azimuth scale, and some have both. Practice converting between these two methods of describing a direction so that you will be able to use either type of compass in an emergency.