Variation is the angle between True North and Magnetic North at a given location, caused by the Earth's magnetic field. It is shown on every nautical chart and changes slowly with time. Deviation is the additional error in the ship's compass caused by the vessel's own magnetic field — from the hull, engines, and cargo. Deviation changes as the ship swings to different compass headings and must be determined by swinging the ship.

The ship's permanent and induced magnetism creates a local field that adds to or subtracts from the Earth's field depending on the compass needle's orientation relative to the ship's magnetic axis. When the ship heads north, the ship's fore-aft field aligns with the Earth's field; when heading east or west, the athwartships component is at its maximum. This produces the sinusoidal deviation curve characteristic of deviation tables.

IMO recommends swinging at least every two years and after any event likely to change the ship's magnetic character: dry-docking, heavy structural welding, significant cargo changes (especially magnetic ores or steel), lightning strikes, or following a change in the degaussing coil settings. SOLAS V/19 requires a proper deviation table or curve to be maintained.

Deviation is analysed into Fourier harmonics: Coefficient B is the amplitude of the component that is maximum when heading East or West (090/270), caused mainly by the ship's permanent fore-aft magnetism. Coefficient C is the amplitude of the component maximum at North or South (000/180), caused mainly by athwartships permanent magnetism. A large B or C indicates a strong permanent magnet that the compass adjuster can partially compensate using corrector magnets.