Tap the nail into the wall with a hammer. Since the nail head needs to be embedded slightly below the drywall's surface, the hammer head will leave a small dent.
Scoop a bit of drywall compound out of the bucket with a 2-inch putty knife. Spread the compound over the dent. Smooth the compound with the putty knife and allow it to dry. It turns a lighter color when dry.
Spread a second layer of drywall compound over the area. Feather out the compound along the dent's edges to blend it into the surrounding wall. Allow this layer to fully dry.
Sand the patched area with a sanding sponge. Add a third layer if necessary. Allow this layer to dry, then sand over the area again. Prime, texturize and paint the drywall compound.