Choosing A Keyword
Google itself will always help you in choosing your keywords, through the Keyword Planner ready service, which offers you alternative terms that you may not have thought of, along with some estimates of how much traffic they could get and at what level competition they can provide.
There is no limit to the number of keywords you can use, but keeping a manageable number is a smart move. Once your ad is written and the keywords are selected, you will (again) be asked for a bid for that ad group.
Keyword Tool:
Tracking your performance
Once your ad is created (or immediately it is created), you will be able to see how it is working. The AdWords home page shows an understandable graph of your performance, as well as tables that describe how your keywords are performing.
Refining Your Ads
Once you start with AdWords, the work is never necessarily done.
An ad that did well last week may be inactive this week, due to Google's audit of its quality, or because a competitor is now offering something better than you. So, check your ads regularly to see what’s working and what isn't. Increase your bids when you need to.
Kill weak ads and change your ads completely to see if the different text gets more clicks.