When I first started trading contracts, I was also confused by these terms. Opening a position, closing a position, and holding a position are actually the entire process of trading, but many beginners don't understand what closing a position is, let alone how to operate it.

Let's start with opening a position, which means establishing a new trading position in the market. If you believe a certain coin will go up, you buy it, which is called opening a long position. Conversely, if you think the price will go down, you sell, which is called opening a short position. When opening a position, you need to pay margin, which is like your risk collateral.

Next is holding a position, which means you are currently holding a trading position. After buying or selling, you are in a holding state. During the holding period, the price will fluctuate, and your profit or loss will change accordingly. This state will continue until you decide to close the position.

The most important thing is, what is closing a position? Simply put, closing a position means closing the position you have already opened. If you opened a long position, closing it means selling; if you opened a short position, closing it means buying. When should you close a position? Usually, when you think the price has reached your target, or the market trend does not meet expectations, and you need to take profit or cut losses.

In terms of calculation, the cost of opening a position is the trading price multiplied by the trading volume. The real key is calculating the profit and loss when closing a position. If you opened a long position, the profit or loss when closing equals the current price minus the opening price, multiplied by the trading volume. In the case of a short position, it’s the opening price minus the current price. The floating profit or loss during the holding period is calculated the same way.

Honestly, understanding what closing a position is very important for beginners because it directly determines your success or failure in trading. Some people hold onto their positions after opening without knowing when to close, resulting in missed profit opportunities or increased losses. Deciding when to close based on market conditions and your risk tolerance is the approach of professional traders.

My current habit is to set stop-loss and take-profit orders, so I can automatically close positions without watching the market every day. Controlling risk and knowing when to close are essential for more stable trading in the crypto space.