The process of tempering a tool is quite varied. There are numerous techniques that I have encountered, including: an oven, a piece of heated metal, a torch, or as simple as a stove heating element (gas preferably, or electric if it is what you have.) I became interested in blacksmithing so that I could make the tools that I need. After a year of practice I am getting better at shaping metal on the forge and I can finally afford a propane torch for tempering. I tempered these tools with the aid of Bill Dawson. Bill tempered all of them for me and I watched his process closely so that I can buy a torch and dabble with tempering knives I am hoping to sell at a local farmers market.
Files are a really accessible and quality source of tool steel. Some are W-1 some are W-2, but they are all going to be high carbon steel. This is important because it holds an edge. The carbon content needs to be consistent between 0.7% to 1.5% for a tool steel. When you anneal metal (soften it) you heat it up to critical temperature (loses magnetism and is bright red) then let it dry slowly in an insulative material. You shape it and the harden it. Once hardened you can temper the metal.
Tempering is the process of drawing back the hardness of the tool. Different parts of the tool need have a different hardness. Look at the blade of this skinning knife I tempered yesterday with Bill.
You can see the blue at the back of the blade then it moves to a pinkish red color and the edge of the blade is a straw/bronze color. The blue at the back of the blade is the softest part and the edge of the blade (broze color) is the hardest. That way the blade is flexible, but not brittle. Check out this tempering color chart for a reference of temperature to color.
You can use an oven, or Bill uses a wood stove for tempering lots of tools at once. However for a knife I like using a torch because you have to closely control how much heat is applied to thicker and thinner parts of the tool. Bill recommended the orca torch. It is a jewelry propane torch that is built very well and has simple parts. There is an air intake control and a propane control.
Fish tank charcoal is a key component in the process. You place the tool in the pellet charcoal and use the charcoal to protect the edge of the knife from receiving too much heat. When starting you can heat the charcoal up a bit so that it does not act as a heat sink. You get the torch to move from a flame to a blue oxidizing flame. Then wave the torch on the handle and back of the blade until the color changing process begins. It takes a while, but once the tool reaches tempering temperature a sheen appears on the blade and it begins quickly changing from straw bronze to pink to purple to blue. When the ideal colors are reached you quench the tool in water and lock the molecules of the blade into their color/temperature specific arrangement.
Here is the knife we finished, and Bill just rapped some rope around the handle to show a wrap pattern. Hope that helps for others who are learning to temper. Make Your Own Tools!