I use a coarse and then a fine diamond stone. I'm certainly no professional, but I can make a knife shave your arm pretty easily. The trick is keeping the same angle for every stroke. They make little tools you can clamp on your knife to keep the angle, but I just free hand it.
I usually start by taking about 5 strokes on one side then five strokes on the other until you can tell it's starting to take an edge. Once I get it to that point I stay with one side until I can rake my fingernail across the edge on the opposite side I'm working and feel a "lip" beginning to form. Once that "lip" has formed on the whole length of the blade, I switch to the other side and do the same thing. I then go to the other side and do it again, but this time it only takes 2-3 strokes. I repeat until it forms a "lip" on one stroke. I then move to the fine stone and repeat. It's the fine stone that REALLY makes a knife sharp, but you have to work it down with a coarse stone.
The steeper the angle you hold, the more durable the edge, but not quite as sharp. (still sharp though) The flatter you hold the knife to the stone, the sharper the edge. I'm guessing about a 30 degree angle is idea for your average everyday carry knife.