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Module 07 — Practical plan: paper trading and your first investment

Goal: move from theory to practice with a gradual path that minimizes the cost of your inevitable mistakes. This module is never "finished": it's your routine for the coming months.

🔊 Listen to this module (Spanish audio, 9 min 17 s)

Narrated version of the full module — perfect for reviewing while you do something else.

Phase 1 — Paper trading (minimum 4-8 weeks)

Trade with fake money while applying EVERYTHING in the course. TradingView has built-in paper trading (free).

Strict rules (otherwise it's pointless): 1. Realistic fake capital: the amount you'd actually invest, not a million. 2. Every trade follows the plan from module 5: risk ≤1%, stop defined before entering, R:R ≥ 2:1. 3. Every trade goes in the journal (notas/diario-trading.md): date, pair, reason for entry (technical + context), stop, target, result, emotions. 4. At least 20 trades before evaluating anything (fewer = statistical noise).

Criteria to advance to the next phase (all of them): - [ ] 20+ trades recorded - [ ] No trade broke the risk rules - [ ] Journal up to date and re-read - [ ] Win rate and average R:R calculated, positive expected value or, if negative, you understand WHY

🧮 How to calculate your expected value (with numbers)

Expected value (or expectancy) answers a single question: on average, does each trade add to or subtract from your account? It's the number that decides whether your system works.

The formula, in plain English:

Expectancy = (Win rate × average gain) − (Loss rate × average loss)

Since you always risk the same 1% per trade and your R:R is 2:1, we measure it in R (risk units): a win is worth +2R (+2%) and a loss is worth −1R (−1%). That way you don't have to wrestle with euros: you count in R and that's it.

Positive example (step by step):

Imagine 20 trades: you win 8, you lose 12.

  1. Win rate = 8/20 = 40% (0.40). Loss rate = 12/20 = 60% (0.60).
  2. Each winner gave you +2R and each loser −1R.
  3. Expectancy = (0.40 × 2) − (0.60 × 1) = 0.80 − 0.60 = +0.20R per trade.

✅ Positive: on average you make 0.20R every time you trade. Even though you lose more often than you win (12 vs 8!), the system wins because each correct call weighs twice as much as each miss.

Negative example (the common case — look closely):

If you win only 6 of 20 (30%) with the same R:R:

(0.30 × 2) − (0.70 × 1) = 0.60 − 0.70 = −0.10R

❌ Negative: on average, each trade subtracts from your account. This is where most people should stop and switch to pure DCA. It's not an opinion: the number is telling you so.

Why we require a minimum of 20 trades

That's why 20 trades is the minimum: with fewer, these numbers are noise, not your skill. Three wins in a row prove nothing; twenty trades start to talk.

If after 8 weeks the expectancy is negative: that's normal and expected. The honest option: forget active trading and go straight to Phase 2 with pure DCA. It's not a failure; it's the statistically correct conclusion for most people.

Phase 2 — Your first real investment (small)

  1. Amount: money you could lose 100% without affecting your life. To start: 200-500 EUR is enough to feel real emotions (paper trading doesn't generate them; real money does, and they're what ruin accounts).
  2. Regulated exchange (EU: Kraken, Bitvavo, Coinbase). Full KYC. 2FA with an app from day 1.
  3. Structure: start with just BTC + ETH (the core). No altcoins in the first month with real money.
  4. DCA: split the amount into 4-8 weekly purchases instead of all at once.
  5. Practice the full cycle once: buy → withdraw to self-custody → test send → wallet restore. The complete mechanics with small amounts.

Phase 3 — Investor routine (ongoing)

Weekly (30 min): - Check the BTC/ETH chart on the daily/weekly timeframe: did the structure change? - Scheduled DCA (automate it if the exchange allows it). - One quality read (below).

Monthly (1-2 h): - Re-read your trading/investing journal. Look for error patterns. - Review the thesis for each position: is it still valid? (module 3) - Review DeFi approvals (revoke.cash) if you used dApps. - Note down: portfolio value, % vs last month, vs the "BTC only" benchmark.

The benchmark of truth: ALWAYS compare your total performance against "what would have happened with simple DCA into BTC". If after 6-12 months you consistently lose against that benchmark, the rational answer is to simplify to DCA. Most people make more money (and live better) that way.

Taxes (Spain) — don't ignore this

  • Every sale, crypto-to-crypto swap, and payment with crypto is a taxable event (capital gain/loss in IRPF, savings base: 19-28%).
  • Buying and holding is NOT taxed until you sell.
  • Reporting obligations: form 721 (crypto on foreign exchanges over 50,000 €), crypto box on your tax return.
  • Keep records from day one: date, asset, amount, price in EUR, fee, for every operation. Tools: CoinTracking, Koinly, or a disciplined CSV.
  • Losses offset gains (with rules). Talk to a tax advisor before your first tax return with crypto.

Resources to keep learning

Foundational reads: - The Bitcoin Standard — Saifedean Ammous (the BTC thesis; biased but foundational) - Whitepapers for Bitcoin and Ethereum

Data and analysis: - DefiLlama (DeFi), Glassnode/CryptoQuant (on-chain), Token Terminal (fundamentals), TradingView (charts)

Criteria for filtering content: - Who pays this creator? Do they hold positions in what they recommend? Do they earn referral fees from the exchange they promote? - Paid "signals" and VIP groups are, with very high probability, a pump & dump on you. - Nobody who could predict the market would sell that prediction for 50 €/month.

Final course checklist ✅

  • I can explain what a blockchain, PoW/PoS, and a smart contract are (M0)
  • I have a self-custody wallet tested with restore + 2FA on everything (M1)
  • I can tell market/limit/stop orders apart and understand why spot only (M2)
  • I can analyze tokenomics and spot red flags (M3)
  • I can read trend, levels, and define invalidation (M4)
  • I have a risk plan WRITTEN AND SIGNED (M5)
  • I know where every yield comes from before touching it (M6)
  • 20+ paper trades in the journal before a single real euro (M7)
  • Tax records from operation #1 (M7)

The final truth of the course: a retail investor's edge isn't in trading better than the funds (you won't); it's in the time horizon (being able to wait years), in not using leverage, in disciplined DCA, and in surviving the cycles. Boring wins.