Recently, I’ve noticed that many beginners in the crypto space don’t understand the most basic concepts of contract trading, especially terms like opening and closing positions, which can really confuse people. In fact, these are the most common operations in trading, and understanding them can save you a lot of detours.

Let’s start with opening a position, which is the process of establishing a trading position. When you are bullish on a certain coin’s market and believe the price will go up, you can buy to establish a long position, called opening a long. Conversely, if you are bearish and expect the price to fall, you can sell to establish a short position, called opening a short. When opening a position, you need to pay a margin to cover potential losses.

Next is closing a position, which means shutting down an existing position. If you opened a long, you close it by selling; if you opened a short, you close it by buying. The purpose of closing is basically twofold: either the price has reached your target level and you’re ready to take profit; or the market has moved against you, and you want to cut losses quickly. The timing of this operation is crucial and directly affects your final profit or loss.

Holding a position means you are currently maintaining a trade. If you buy but haven’t sold yet, or sell but haven’t bought back, that period is called holding a position. The profit and loss of a position fluctuate with market prices in real time, which is why many people keep watching the charts frequently.

Calculations are actually not complicated. The cost of opening a position is the opening price multiplied by the trading amount. If you opened a long, the profit or loss upon closing equals (current price minus opening price) times the amount. For a short, it’s the opposite: profit or loss equals (opening price minus current price) times the amount. The method for calculating unrealized profit and loss during the holding period is the same.

Honestly, choosing the right timing for opening and closing positions is the most difficult part. It requires judgment based on your risk tolerance and market conditions. Some people open positions too aggressively, others close too hesitantly—these can easily lead to pitfalls. The most important thing is to have risk awareness, avoid going all-in on a single position, and learn to open and close in batches. This helps better manage risk.

If you’re still a beginner, I recommend practicing with small amounts multiple times to familiarize yourself with the entire process of opening and closing positions, and to understand how price changes affect your holdings. Once you truly grasp these basic concepts, gradually increase your trading size. These things may seem complicated at first, but they are just repetitive operations—practice slowly, and you’ll get the hang of it.