The Handyman's Pocket Book: Grinding Tools.

Tools made from carbon steel, such as chisels, plane cutters, screwdrivers, and so on should if possible be ground on a wet stone.  If the small dry bench grinder is used there is a risk of the temper of the steel being drawn by the heat generated.  This can to an extent be counteracted by dipping the tool frequently into water, but even so there is considerable risk, especially when the edge is reached.  The thin steel here heats up quickly.  The first sign of burning is a blue colour in the steel, and once this is visible it is too late; the damage is done.  If no other grinder is available dip the tool frequently into water and do not continue to grind too long at any one time.  It is also a help if grinding ceases before the extreme edge is reached.

A wet grindstone should not be left standing in water because water softens it.  If there is a trough empty it out after use; otherwise the submerged portion of the stone will wear rapidly in use causing the whole to become out of shape.  Dry stones such as those made from corundum should not be used wet.

Whatever the tool being ground move it from side to side on the stone so that the wear is equalised.  This is specially necessary with small tools which are liable to dig into the stone and leave uneven troughs.  In the case of knives, axes, and similar tools with long edges the tool should be moved back and forth in the same way.  This ensures that the edge is ground to the same extent throughout, and also prevents any one part from becoming too hot through friction.