Paper-trade the playbook before you fund it
A few months back I admitted I was running two Aerodrome LP positions on vibes — claiming AERO each morning, pasting it into a spreadsheet, and calling it a book. The fix wasn't more discipline, which is what you reach for when you don't have a system; it was writing the system down.
I call the written version a playbook. It's the part of the strategy that lives outside my head: the conditions to enter, the rules to size, the triggers to exit, and the things that make me close no matter how the chart feels. And before a playbook touches real capital, it runs on a paper account first. Not because paper trading is realistic — it isn't, and I'll get to why — but because the act of running it surfaces the holes in the rules before those holes cost me anything.
Why care right now
- Most DeFi losses aren't from bad theses. They're from good theses held with no exit rule — the position that was "obviously" going to recover.
- Backtests flatter you. They run on clean history with no slippage, no gas, no fat-finger, and no 2am decision-making. A paper account run forward, in real time, breaks that spell.
- The cheapest mistake is the one you make on a position that doesn't exist yet.
What a playbook actually contains
A thesis is "veAERO voter yield is underpriced." A playbook is what you'd hand a stranger so they could run that thesis without asking you a single question. The difference is specificity. Mine have five parts:
| Part | The question it answers |
|---|---|
| Entry conditions | What has to be true before I open this — not "it looks good," but a list I can check off |
| Sizing rule | How much, as a function of the account, not a gut number |
| Management cadence | How often I touch it, and what I'm allowed to do when I do |
| Exit triggers | The conditions that close it — including the ones that close it for a win |
| Invalidation | The single thing that, if it happens, means the thesis was wrong and I'm out regardless of price |
The last row is the one most people skip, and it's the one that saves the account. An entry without an invalidation isn't a trade, it's a hope. Writing the invalidation down — before you're in, before you're attached — is the whole game.
Why paper first, even though paper lies
Paper trading has a deserved bad reputation. You don't feel the loss, so you hold through pain you'd never tolerate with real money. Fills are perfect. Slippage is zero. The psychology is fake. All true.
But I'm not running a paper account to simulate the feeling. I'm running it to test the rules. Two very different jobs.
When I take a fresh playbook and run it forward on a paper account, I find out within a week whether the rules are even executable. Does "exit when emissions enter the tail phase" mean anything I can actually check on a Tuesday morning? Is the sizing rule computable from numbers I have, or did I hand-wave a term? Does the management cadence collide with the rest of my life? Paper trading answers those questions for free. The feeling, I'll learn with real size later — but I'd rather learn it on rules that already survived contact with reality.
The workflow
Here's the loop I run, and the one I'm building the product around:
- Write the playbook — all five parts, in plain language, before any money.
- Open a paper account and run it forward — same decisions, same cadence, same clock as the real thing, just no capital at risk.
- Log every action against the rules — not the outcome, the adherence. Did I follow the playbook, or did I improvise? Improvisation is the signal that a rule is missing.
- Patch the playbook where it broke — every improvisation becomes a new written rule.
- Fund it only when the rules stop changing — when a forward run goes a full cycle with no improvisation, the playbook is done. That's the green light.
The graduation criterion is the important part. You don't fund a playbook because it made paper money. You fund it because it stopped needing you to make judgment calls it didn't already account for. Paper profit is noise. A stable, complete ruleset is the signal.
The honest version
I'm not all the way through this myself. Two of my own positions still run on a playbook that has a sizing rule I know is too loose, and I haven't done the forward run to fix it. Writing this is partly me holding my own feet to the fire.
But the direction is right, and I'm certain of the core claim: the order matters. Rules, then paper, then money. Reverse it — money first, rules later — and you spend the most expensive capital you have buying lessons you could have gotten for free.
The spreadsheet was me trading on feeling and calling it a book. The playbook is the book actually existing. Paper-trading it first is how I find out whether it's a book or just a nicer-looking feeling — before the answer costs anything.