Many beginners in the crypto space are most confused by these trading terms. Opening a position, closing a position, holding a position — these three concepts seem simple, but truly understanding them has a huge impact on your trading success or failure.

I’ve noticed that many newcomers get stuck here. Once you grasp these three concepts, contract trading becomes truly accessible. Today, I’ll clarify these things.

First, let’s talk about opening a position. Opening a position means establishing a new trade in the market. Simply put, if you believe a coin will go up, you buy it—that’s opening a long position. Conversely, if you think it will go down, you can sell it—that’s opening a short position. When opening a position, you need to pay margin, which ensures you have enough funds to cover potential losses.

Next is closing a position. Closing a position means you’re closing an existing trade. When you think the target price has been reached, or the market direction is wrong and you need to cut losses, you close the position. If you opened a long position, closing it means selling; if you opened a short, closing it means buying back. The purpose of closing is clear—either to realize profits or to cut losses.

Holding a position refers to the position you currently hold. After opening a position but before closing it, you are holding. During this period, your profit or loss fluctuates with the coin’s price movements. When you’re long, if the price rises, you profit; if it falls, you lose. When you’re short, it’s the opposite.

How do we calculate the account? There are actually four factors: opening price, current price, trading volume, and profit/loss.

The cost of opening a position is the opening price multiplied by the trading volume.

Calculating profit or loss for closing or holding a position is a bit more complex. In a long position, profit/loss equals (current price minus opening price) times trading volume. In a short position, profit/loss equals (opening price minus current price) times trading volume.

All these points aside, the most important thing is: opening and closing positions should be based on market conditions and your risk tolerance. Many people lose money not because they don’t understand these concepts, but because of poor risk management. Hesitating to close when it’s time, or being overconfident when opening a position.

My advice is to start practicing with small amounts, truly understanding the timing for opening and closing positions. This is much more important than blindly chasing high returns. Managing risk well is the key to surviving longer in the crypto space.