Hold the handle firmly so you've got a good grip, it doesn't matter where exactly you arrange your fingers. Use your wrist to change the angle of the knife in relation to your paint, and remember that the knife can be used "upside down".
Pick up some paint off your palette using the tip, as you'd pick up some butter with a knife. Use the side of the blade to spread paint across your canvas, or press it onto the canvas, as you would spread butter across a slice of bread. It'll seem strange at first as it's quite different to using a brush.
Using just the tip of the blade will produce small dots. Pressing the edge of the knife down will produce fine lines. Pressing the blade flat down into the paint will produce ridges. Scrape back into the paint to reveal underlying layers (called sgraffito).
A painting knife can be used with any paint (including watercolor!), but is particularly effective with paint that's got a relatively stiff consistency to it, that retains its form and the marks you're making with the knife. If you're using acrylics, you can add texture paste to thicken up the paint.
See Mark Making with a Painting Knife for more on the results you can produce with a painting knife.
