From my experimenting, which is not over by the way, I found that this simple excercise was the most revealing.
You will need a huge magnet like used in a wind power project. The rest is available through normal hardware store or RS. I'm sure a good sized speaker magnet would probably work if you have a sacrifice to make.
1 small spool magnet wire (about 30 feet of 24AWG)
1 bulb from or for a keychain flashlight (two refills for $1 around here)
1 Neodymium magnet 1inch x 2inch and 1half inch thick (about $10 plus shipping and any tax)
Step 1: Get wire off the spool and re-wind it
The idea is to expose as much wire to the highest concentration of magnetic field as possible without shorting the wire in the coil. This is why we use magnet wire. It isnt magic wire that makes electricity, it is just that magnet wire has a much thinner sheath and its usually made of enamel.
The extra thin sheath allows you to cram more wire in the same space as you would regular wire.
The attached mov file is my drill coil winding jig in action.
Step 2: Why wind it flat?
Magnetic fields drop off with a very high curve. They are strongest when in direct contact with a surface. This is why we want to put our wire into a shape similar to the magnet and be able to get it as close as possible for exposing the coil of wire to the magnetic field.
In commercial applications, there would be a metal in the hole of our wire coil. We are not going that far. It is there to draw the magnetic field more completely through the coil. More efficiant in some ways. Not here.
Step 3: Now what? Its wound flat... Sort of...
Tape it up with two leads hanging out.
I know the image isnt the sharpest, but we are looking at one lead from the coil. I stripped the end with some sandpaper and then coiled it around a small screwdriver.
Do this or something similar to strip both ends and make a couple of tight loops. This is not critical, it just gives us a point to attch the light bulb without soldering.
Step 4: Remove bulb from flashlight or packet if you purchased one...
Step 5: Hold the coil and strike the magnet here come the electrons!
While holding the coil in one hand, hold the magnet in your dominant hand and slowly motion the magnet past the coil. This is to visualize what you are about to do quickly and to make sure your thumbs are not in the way or the two wire leads. If anything is in the way and might get caught, adjust accordingly.
Now as you will pass the magnet swiftly over the coil, you want to get as close as you can without hitting it. The flat side of the magnet face to face with the flat side of the coil. This is a side to side, not up down motion. The speed the magnet passes has an effect on the voltage created. You will feel a vibration in the coil when everything works right. This is NOT electricity flowing through your hand. It is a ripple effect or vibration from the coil making sudden drag on the magnet and the leads hanging out.
If you move the magnet past fast enough and your contacts are good and you have enough length of wire in your coil, your light should blink on with each pass.
Step 6: An alternator...
When you build a wind power generating machine, you are putting together a team of these coils and wireing them for optimal performance. Then you are mechanizing a motion of the permanent magnets to blast past the coils as the machine turns in the wind. Thats the summary.
Check out my savonius rotor project PDF for more details on the alternator.
The attached mov file is my hands striking past the coil and the bulb lighting up.