How do you know if your head gasket is bad?

A visual check of the oil can tell sometimes. Oil should not look brown, milky or have bubbles in it. Sometimes excessive smoke from the exhaust can be a sign. Excessive coolant consumption and a lack in power might be another sign. Another more involved way is a compression check on all the cylinders. That will tell you if there is a leak from the combustion chamber and which cylinder/cylinders.