Investing & Online Stock Trading : The Importance of Having a Mentor and a Stock Trading Plan

On Friday evenings I look forward to closing the week by going twilight racing on a friend Alan's 30 ft yacht on beautiful Sydney Harbour. It's a wonderful experience, with some spectacular sites of the city skyline and the many sails as we return to base in the setting sun. We have a handicap of about half an hour, which means we start about half an hour after the first boats. Yet week after week we manage to overtake the other boats and arrive back at or near the front..... At the start of the season the club organisers decided to challenge us further by moving us into the next category of yachts - to race against the 40ft yachts which are designed to be faster due to their increased sail area and length...... yet a few weeks ago we took out line honours there too! What's the secret? Is it a special purpose built lightweight boat with secret features built for speed? Do we have a special winged keel like Australia 2 had in 1983 to win the America's Cup? No. None of these. It is a standard yacht built over a decade ago. Our hidden gem as to why we do so well is the experience and leadership of our tactician Jim Vaughan. His many years of sailing on board many owners' boats in all conditions means that he is totally in tune with all the parameters needed to win. He plans each race before we hoist a sail. He checks weather forecasts, current weather conditions, tides, winds, competition, skill levels and weight of those on board.... the list goes on. Then, once we cross the starting line Jim watches for every slight change that may come our way. For nearly two hours Jim checks every detail around him on the boat, what the crew are doing, the surface of the water for tide and wind changes - to make sure he sticks to his plan or makes fine changes to suit if any unexpected changes occur. Yesterday I had the pleasure of helping him and a few friends sail the yacht about 20 nautical miles in the open sea from an inlet called Pittwater (North of Sydney), past Sydney's northern beautiful beaches, before re-entering Sydney Harbour. While this was not a race, Jim and Alan still planned the trip down to the smallest detail. For this one we had charts; Global Positioning equipment to check not only position but also our actual speed relative to the ocean floor bed and extra safety equipment in the form of personal EPIRB - so that satellites could track us if we fell overboard ............ This time we were due to sail south into a south west wind. For the benefit of non sailors, let me first explain that you can't sail into a wind head-on. This means that you have to 'tack' back and forth in a series of steps in a zig-zag pattern to progress forwards. For our journey yesterday Jim eluded to us that in addition to the wind coming almost face on, we also had an opposing tide to slow us down too. Jim's solution? He also explained that a few miles off the coast there were ocean currents which contained warmer water - travelling southwards in our favour. The weather forecast was for slight seas and no storms forecast so his risk assessment was that he felt safe heading straight out to sea. So rather than do a series of multiple tacks backwards and forwards close to shore, Jim's plan was to sail a few miles out to sea until we found these warmer waters and then to alter course to take only one more tack straight in through Sydney Heads. Sure enough, when we found the ocean current, the colour of the sea turned a magnificent shade of blue; we watched the sea temperature climb from 23.8o C to 26.3 o C within an hour and the GPS measured our real speed over ground increase by a few knots. The result of Jim's contrarian approach? We clipped almost an hour off the overall sailing time taken by other yachts as they went to and fro close to shore, trying to make headway against an opposing wind and tide. In comparison, our experience miles off the coast was to me one of those magic moments to be treasured forever. As we achieved our goal and safely rounded North Head at the entrance to Sydney Harbour, I reflected on what had made the difference to our success - to making it appear simple:  Having a mentor - being able to follow Jim who has several years of experience, knows what he's doing and can handle the simplest and most difficult conditions  Calculating our risk exposure in advance and having safety equipment and safety procedures in place  Taking the time to make a detailed Plan before we cast off from the safety of the yacht club mooring.  Including within that plan, the 'what ifs' - to know what we would do if conditions didn't go our way.  Having the right charts, with indicators, tools and skills to monitor and review our progress  Having made the Plan, the decision then to stick to it with discipline. My mind then turned to successful stock trading - and the parallels sprung out as being so very similar. The activity of sailing vs trading may appear vastly different at first sight. Look a little deeper and we see the principles of success remain the same.