If your iPhone is equipped with a compass, you can enable it in the Sensor Settings. The position indicator has a red triangle that points in the direction the iPhone is pointing. This is a very useful feature for navigation on foot, as you can determine directions while you are standing still. To enable the compass, go to the flip side, press the settings button on the toolbar and "Sensor Settings", and turn on the compass.
Note, when using the compass, you may find it gives wildly inaccurate results. First make sure you are away from any magnets or steel objects (it does not work reliably in a car). The best way to re-calibrate it is simply rotate the iphone in a slow tumbling motion, about all three axes, to expose it to the field from all directions. It does not need to be in any special mode to do the calibration.
There are two ways you can use the compass feature. First, point the iPhone in an intended direction of travel, or in the direction of a feature you want to identify on the map. The indicator triangle then shows that direction on the map.
Another way you can use it, is to rotate the iPhone so that the indicator triangle points to the top of the screen. When it is pointing straight up, the map is now oriented geographically, so that directions on the map are the same as directions on the ground.
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