Knowing when you have a bite depends on what you're fishing for and what you're using to catch them. If you're using a worm and a bobber, knowing when you have a bite is pretty easy. If you're fishing something else, its harder sometimes. A lot of people who have been fishing since they were kids still dont always know. I sure dont. Personally, when in doubt, I set the hook.
To set the hook, you basically want to pull the pole from about a 8 or 9 o clock position to a 1 or 2 or 3 o clock position as fast as you can. Itll force the hook into the fishes mouth (hopefully.) after that, if hte fish is hook, reel in the slack while dropping your rod and keep tension on the line until you reel the fish in.
What are you fishing for, and what are you fishing with?