Just Add Water has a useful article on techniques to show whether form fields are required or optional.
Personally, I tend to put an asterisk next to the label of the required field, or write (required) after the input box, depending on the layout of the form (although, on reading the article, my second approach seems to be questionable).
One good point is not to use bold to indicate required fields as this causes accessibility issues.
Red Asterisks for Required Fields: Good or Bad?
There’s an interesting discussion about using a red asterisk to indicate a required field – an increasingly common practice, it would seem.
However, form expert, “Brian Crescimanno (author of the ALA article Sensible Forms), recommends that you don’t do this because red is often used to denote an error or a warning.
While this is true, I would question whether this practice actually causes any confusion in users.
Red is often used in the real world to indicate that something is important (e.g. a stop light or sign), so I’d be inclined to think that users would carry this logic over to the web.
In addition, is there another color that would make any more sense to use?
Of course, the only real way to know for sure is to test this out with actual users. Another task to add to my next usability testing session!