Theory:

Experiment:
  
The direction can be found easily with the help of a magnet by a simple technique.
 
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A suspended bar magnet
  1. Tie a thread to the middle of a bar magnet and suspend it.
  2. Mark a line along the direction in which the magnet stops on a sheet of cardboard underneath it.
  3. Gently rotate the bar magnet again.
  4. Mark the magnet's end position on the sheet again when it comes to rest.
  5. Repeat this process for a few times.
Inference:
  
It is observed from this simple activity that the magnet rests in the same direction again and again, which is the north-south direction. A magnet, when suspended freely in the air, will always come to rest in the north-south direction.
 
Navigation purpose:
 
The direction of the sun in the morning helps to find the direction towards the east. The direction of the sunrise may not be exact but helps to find north and south directions. Hence, this unique property of a magnet is used to find directions for centuries now.
 
The Chinese discovered that a natural magnetic stone, i.e., lodestone, when suspended, aligns in the north-south direction at rest. Chinese travellers used these lodestones for navigation in the ocean. They suspended a piece of lodestone in their ships or boats to locate directions during a storm.
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Chinese navigating using lodestones