When I trained at a shodokan aikido dojo, I was told that the correct way to hold a knife during practice was with the blade facing up - i.e., if you held the knife horizontally, the sharp side would face the sky, and the dull side, the floor; the isntructor said that if you see somebody holding a knife this way, then 'they really know what they're doing'.
But i've never seen anybody else do this; so what is the correct way to hold a tanto, and why?
1. Ensure pointy end/slashy edge is towards ennemy. Most important.
2. Sensei Kashimura Yoshinobu of Sukagawa, Japan, has also instructed me in the same manner of holding a knife, so your not alone.