I happened to see a beginner asking about the basic concepts of contract trading, so I’ll share my understanding. Honestly, the terms open position, close position, and holding position can indeed be confusing in the crypto world, but they’re not hard to understand.

Opening a position means establishing a new trading stance in the market. For example, if you’re bullish on a certain coin, you buy it, which is called opening a long position. Conversely, if you’re bearish on a coin, you sell it, which is called opening a short position. When opening a position, you need to pay margin to cover potential losses.

Closing a position means shutting down the position you’ve already opened. When you think the market has moved to your expected level, you can choose to close the position. If you previously opened a long position, closing it means selling; if you opened a short, closing it means buying back. The purpose of closing is simply to lock in profits or cut losses.

Holding a position means you are currently maintaining a stance. After opening a position, until you close it, you are in a holding state. During this time, your profit or loss will fluctuate with the price movements.

To calculate these clearly, you need to understand a few elements: opening price, current price, trading amount, and profit/loss. The calculation method is quite straightforward. The opening cost is the price multiplied by the amount. For profit/loss upon closing, for longs it’s (current price minus opening price) times the amount; for shorts, it’s the reverse. The logic for calculating the holding profit/loss is the same.

In simple terms, closing a position means ending a trade. Mastering the three steps of opening, closing, and holding positions, along with risk management awareness, can help you avoid many pitfalls. The most important thing is to decide when to open and close based on your risk tolerance and market conditions. Managing risk well is key to surviving longer in this market.