New friends who just entered the crypto space are probably confused by terms like opening positions, closing positions, and holding positions, right? I was the same at first, feeling like these words were as cryptic as codes. But once you understand these concepts, contract trading becomes much less mysterious.

Let's start with the basics. Opening a position actually means deciding when to enter the market. If you’re optimistic about a certain coin’s trend, you buy to establish a long position, which is called opening a long. Conversely, if you think the price will fall, you sell to establish a short position, called opening a short. You need to pay margin when entering, which is the risk guarantee required by the exchange.

Next is the meaning of closing a position. Simply put, it means deciding to exit. When your target price is reached, or if you feel the trend is off, it’s time to close the position. Closing a long position means selling, closing a short means buying back. The purpose of closing is basically twofold: either to lock in profits or to cut losses in time. Timing is really crucial here; many people lose money because they make poor decisions on when to close.

Holding a position refers to your current stance. Until you close your position after opening, you are in a holding state. During this period, your profit and loss are floating, changing with the market price. Long positions are bullish, short positions are bearish, and their profit/loss calculation logic is different.

Talking about calculations can be a bit complicated, but it’s actually not hard. The cost of opening a position is your entry price multiplied by the quantity. As for profit and loss calculation upon closing, for long positions it’s (current price minus entry price) times the quantity; for short positions it’s (entry price minus current price) times the quantity. The floating profit and loss during holding is calculated the same way as closing, just without actual settlement yet.

Honestly, once you master these three concepts, the most important thing is learning when to act. Market conditions change rapidly, so you need to decide when to open or close based on your risk tolerance. Some people prefer frequent trading, others prefer long-term holding. There’s no absolute right or wrong; the key is risk control. My advice for beginners is to start with small amounts to experience the actual process of opening and closing positions—this is much more effective than just reading theories.

Finally, a reminder: trading always involves risks. Even with small positions, you should have a stop-loss plan in place. If you’re interested, you can try various trading pairs on Gate, practicing while learning yields the best results.