A magnetic compass indicates direction when magnets mounted on the compass card align themselves parallel to the Earth’s lines of magnetic force. The numbers are printed on the back side of the card and the pilot reads the aircraft heading according to the number which is opposite the lubber line. The card, in effect, remains stationary while the aircraft and pilot rotate around it.  In a left turn the pilot will see the numbers decrease and in a right turn they will increase. 

Limitations of the magnetic compass include the following:

ERRATIC MOVEMENT of the compass card at steeper bank angles (beyond 18 degrees) or by turbulence or rough control technique.

DEVIATION ERROR: due to electrical and magnetic disturbances in the aircraft.

VARIATION ERROR: due to the angular difference between true and magnetic north (isogonic lines of variation).

DIP ERRORS: 

Acceleration Error—On east or west headings, while accelerating, the magnetic compass shows a turn to the north, and when decelerating, it shows a turn to the south. The dip-correction weight causes the end of the float and card marked N (the south-seeking end) to be heavier than the opposite end. If the aircraft accelerates on an east or west heading, the inertia of the weight holds its end of the float back and the card rotates toward north. As soon as the speed of the aircraft stabilizes, the card swings back to its east or west indication. If, while flying on this easterly or westerly heading, the aircraft decelerates, the inertia causes the weight to move ahead and the card rotates toward south until the speed again stabilizes. Remember ANDS (Accelerate North Decelerate South).

Northerly Turning Error—the compass leads in the south half of a turn, and lags in the north half of a turn. When an aircraft flying on a heading of north makes a turn toward the east, the aircraft banks to the right, and the compass card tilts to the right. The vertical component of the Earth's magnetic field pulls the north-seeking end of the magnet to the right, and the float rotates, causing the card to rotate toward the west, the direction opposite the direction the turn is being made. If the turn is made from north to west, the aircraft banks to the left and the compass card tilts down on the left side. The magnetic field pulls on the end of the magnet that causes the card to rotate toward the east, opposite to the direction the turn is being made. Thus, when starting a turn from a northerly heading, the compass indication lags behind the turn (You get there before the compass does). When an aircraft is flying on a heading of south and begins a turn toward east, the Earth's magnetic field pulls on the end of the magnet that rotates the card toward east, the same direction the turn is being made. If the turn is made from south toward west, the magnetic pull starts the card rotating toward west—the same direction the turn is being made. Thus, when starting a turn from a southerly heading, the compass indication leads the turn (The compass gets there before you do). Remember UNOS (Undershoot North Overshoot South). If the desired heading is:

360 degrees — Lead by 30 degrees

030 degrees — Lead by 20 degrees

060 degrees — Lead by 10 degrees

090 degrees — Lead by 0 degrees

120 degrees — Lag by 10 degrees

150 degrees — Lag by 20 degrees

180 degrees — Lag by 30 degrees

210 degrees — Lag by 20 degrees

240 degrees — Lag by 10 degrees

270 degrees — Lag by 0 degrees

300 degrees — Lead by 10 degrees

330 degrees — Lead by 20 degrees