When I first entered the crypto world, I was confused by all kinds of professional terms. In particular, the three concepts of opening a position, closing a position, and holding a position look simple, but truly understanding them still takes a bit of time. Today, I’d like to share my understanding of these trading basics with everyone, hoping to help more beginners avoid detours.

First, let’s talk about opening a position. In fact, it means establishing a new trading position in the market. When you’re bullish on a certain coin and believe the price will rise, you can buy in—this is called opening a long position. Conversely, if you think the price will fall, you can sell first—this is called opening a short position. When opening a position, you need to prepare margin so that you can withstand possible losses.

Next is what closing a position means—many people actually don’t understand it very well. Closing a position means closing out the position you have already opened. In simple terms, it means liquidating the position you hold. When you open a long position, closing it means selling; when you open a short position, closing it means buying back. Why close a position? There are basically two reasons: first, you’ve reached your expected goal and want to take profit; second, the market doesn’t go as expected and you want to cut losses. Understanding what closing a position means is especially important for risk management.

Holding a position is the trading position you are currently holding. After you buy or sell a certain coin, you enter the holding state. During the holding period, your profit and loss will change along with price fluctuations. With a long position, when the price goes up you profit; with a short position, when the price goes down you profit. The opposite is also true.

As for how to calculate it, the core is four elements: the opening price, the current price, the trading quantity, and profit/loss. For example, if you buy 1 BTC at 1000 USDT, and the current price is 1100 USDT, then your unrealized profit right now is (1100 - 1000) × 1 = 100 USDT. If you want to close your position, you can realize that 100 USDT profit.

For the specific calculations, the unrealized profit or loss when closing a long position is (current price - opening price) × trading quantity, while when closing a short position it’s (opening price - current price) × trading quantity. The method for calculating unrealized profit/loss during the holding period is the same.

To be honest, mastering these basic concepts is crucial for doing well in trading. Many beginners lose money not because they got the direction wrong, but because they don’t know how to open, close, and manage positions properly. My suggestion is: you must decide when to open a position and the size of it based on your own risk tolerance, and then set your stop-loss and take-profit levels—this is how you can effectively control risk. If you fully understand what closing a position means, you’ll have succeeded in trading by half.

Finally, a reminder: in trading, risk must always come first. No matter how good the market looks, it isn’t worth taking excessive risk. I hope everyone can find a trading rhythm that suits them in the crypto world.