The first step is to create the ad.
The next step is to enter your keywords you want to bid on into the box:
keyword a
keyword b
keyword c
keyword d
-free
-crack
-keygen
The above entry will not show keywords "a" through "d" for any query that includes any of the negative terms: free, crack, or keygen.
I generally use this list -
blue widgets
"blue widgets"
[blue widgets]
This way exact search for blue widgets goes to the 3rd ad-group. For others, if blue widget was in exactly this order as in "blue widget manufacturer", the 2nd ad group gets credit and for others, the 1st group gets credit. This way I can more easily identify the searching pattern.
Also, the CTR for the 3rd group is geenrally much higher. At times I even switch off the 1st category if there is a very broad matching.