The compass should point straight at the object, usually the front door from the inside looking out. When I say straight I mean an exact "T" where the compass is the base of the "T" and the door is the top of the "T". Turn the compass knob (B) so that the 0 line or fat arrow (C)on the bottom aligns with the top arrow (D). 0 is North 2.

Your either going to have strings or a big straight arrow like (A) to take your measurements. What ever sector falls underneath (A) is the measurement you should take.

Chinese Compass

The red arrow should line up with 180 degrees south which is south subsection 2. Point the compass straight at the door, take the measurement that falls under the string perpendicular to the door.