I use the Google AdWords tool to do the initial keyword research for my campaigns. Other people on here will tell you that it's worthless and it skews information. But, I've never had a problem getting ranked for specific key phrases using that tool. It's a good place to start.

Here's a little bit of advice: Do some comp. research first and find out what the market is like for whatever niche or industry your website is for. See who's ranking in the top 10, visit their websites and read their copy. See what keywords they might be using in their Title Tags, Descriptions, Headings, etc. Look at their source code. Check their backlinks and see what anchor text their using. Put together a list of the keywords that you want to rank for and then run them through the GAKWT and get some more suggestions for other keywords. Rinse and repeat. Then determine Tier 1, Tier 2, and Tier 3 keywords and optimize accordingly.

That's the 2 minute version, lol. If you really need help, feel free to contact me via Skype and I can help you out.

First of all, write down a list of relevant keywords, 30-50 of them will be enough. Brainstorm is perfect for doing this quickly. You can also check out your competitors sites.
You can also use keyword research tools for getting list of keywords and other data, some are paid, some are free. Thread is not about that.
Then narrow down your research, and find out your targeted selling keywords.
And ask somebody or imagine how people will make a query in SE, and what they are seacrching for.
Hope this will help you to find YOUR keywords.
Good Luck!

I can highly recommend Shane's free keyword research guide.

Keyword Research Guide | IM Impact

I second what was said above. I also second the notion that YOU need to sit down and think of what keywords likely visitors will use to search for the solution you offer to their need. Be sure that you research the competition for those keywords also.

a really good online tool is Rank Authority Labs they have a 30 day free trial also

i love this program alot!

Google kw tool will not tell you the Google top 10 competition
thats the ONLY thing that will tell you your true competition

tell me where the google kw tool does that? it doesnt
any serious webmaster uses traffic travis or Market Samurai for the top 10 competition and those are not free

no free tool will give you the top 10 google competition in a timely manner

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What is it that you're trying to accomplush? Keywords for new site? Keywords with EMD? Keywords for PPC?