Well, sequential shift is about as good as it gets on keyboard. As far as I know, Fully Manual: Stick Shift is specifically designed for a dedicated shifter peripheral. From the Beginner's Guide:
Fully manual: stick shift - This mode is useful if you have a game controller with an H-shifter (like Logitech G27). In this mode the player can set gears 1-6, N, and R directly by the stick.
This won't work on the default keyboard input map because that transmission mode requires separate inputs for gears 1-6, neutral, and reverse, which aren't included on the keyboard map. It only has A for a generic shift up, Z for a generic shift down, and Shift for a clutch. I suppose you could
try to manually map those specific controls to the keyboard and attempt not to have conflicting controls, but it would be much better if you used a physical shifter.