I use the TAMIYA MASKING TAPE to initially mark out the waterline, placing the tape just below the pencil line (pencil line is then covered with hull colour paint). The TAMIYA TAPE is available in several width's and can be shaped round curves (round stern etc.) very easily.
If rubbed down well produces a very sharp line with no under painting. If a number of coats of paint have been applied it is best to remove the tape before the paint has really hardened to avoid lifting the newly applied paint.