my setup is pretty low tech as far as equipment, but the old methods take a bit more high tech execution...the Japanese traditional method of knifemaking involves lots of pushing as close to temperature and steel stress limits as possible (and involves lots of risk and lost blades too!)
my forge is basically a pile of bricks; a Japanese swordsmith style sideblast charcoal forge, running on softwood charcoal made from local deadfall pine and cedar mill scraps...
when i forge, i stay as low temp as i possibly can for the steel type, avoid hotspots, and drop it more as i near the end, forging to black on several of the last heats, kind of a built in normalization cycling, then the last cycle i put it into fine wood ashes to cool slowly before filing to clean up the shape...
my quenching method is based on the traditional swordmaking method as well, coat the blade in a thin layer of clay slip (this is to exclude oxygen and slightly speed up the cooling rate) and then coat the body of the blade (everything but the edge) in a thicker layer of clay mixture (about 1/8", this is to slow down the cooling rate by about a half second)
when its dry i close up the shop so its fairly dark and heat slowly and evenly in the charcoal fire until just above critical and quench straight into very warm rain or snow water...if the steel doesn't crack from the stress, it has been born as a blade...tempering is either done on the coals (but this takes a real delicate touch and lots of patience) or in the oven for consistency in batches of 2 or more, and i often temper quite hard as the differential process goes a long way towards preventing brittleness.
the metallurgy behind this is that the edge cools at a rate fast enough to freeze the carbon in place, creating a very hard type of steel crystal called martensite, while the body cools slower and forms a tough matrix of ferrite and pearlite...instead of compromising to find a midpoint between hard and tough, the steel properties are diversified to where they are needed most...so cool!
the mixture is roughly thirds of clay, charcoal powder, and finely ground stone or sand or ceramic...the finer everything is, the better, and the secret of the ingredients is just to get a blend that will not shrink, crack, fall off, or burn up before it hits the water...
going slightly above non-magnetic works for a very simple steel, but the more alloying ingredients in it, the farther away critical moves from non-magnetic...its a good idea to do some testing, learn your particular steel, and don't rely only on magnetic testing but watch for re/decalescence and even colour distribution, etc...
just some of the insights i have gathered over the years, still lots for me to learn!
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some destructive testing on a clay-tempered blade (that turned out to be non-destructive), showing the dual characteristics of hard edge and tough body enabling a little blade to be hammered through a 3/8" steel rod without damage...don't do this at home!

from here:
http://instagram.com/p/iFVYa5GGYc/