To set the hook, click and hold the arrow on the rod, when the bobber goes up or down, run your mouse up the pad, jerking the rod up in a hook set. You can also deadstick it and click the lure up/drop icon; you can also hit the space bar on your keyboard to reel in, set the hook. I have caught fish, deadsticking, slight jigs, and much jigging. This is very realistic to icefishing.
Mike