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There are three ways to drink a potion. The simplest is to use the appropriate hot key from the keyboard. For example the space bar will "drink" a health potion. The second method is to click the mouse on the appropriate potion image in your control panel. These are arrayed in an arc around the central quest indicator arrow. The third method is to right click on a potion bottle in your backpack.
Health potions will not be consumed if your character is already at full health. A side effect of this: you cannot drink a health potion to heal your horse while you are at full health – you must take some damage first. The potions, and their uses are described below.
Health potions are red. The hot key for health potions is the space bar. They restore part or all of your hitpoints, depending upon the size of the potion and the game difficulty selected (Bronze, Silver, Gold, Platinum or Niobium).
Mentor potions are blue. When consumed, they increase the amount of experience that your character gains by 50%. The hot key for mentor potions is 'W'. When active, there is a yellowish glow emanating from your character's head. The size of the potion merely increases duration of the effect, but does not increase the percent bonus. Mentor potions are the only potion you cannot buy at a merchant.
Potion of Concentration
Potions of Concentration are yellow. Their effect is to instantly reset the timer on your "Combos". Rather than waiting for the regeneration to take place, simply drink a yellow and re-fire the combo. The hot key for Concentration potions is 'R'.
Potion of the Viper's Antidote
The Viper's Antidote is green. It counteracts the effect of residual poison damage-over-time. The hot key is 'E'.
Potion of Undead Death
This potion is purple. In single player mode, when active, this potion ensures that the undead do not reanimate. (In multiplayer, the undead do not reanimate anyway.) In both single and multiplayer mode, this increases the damage you deliver to the undead. When active, a greenish glow emanates from your character. The hotkey is 'Q'.