Look at the top dressage riders. Their hands are closed in a fist.
Some trainers tell riders to ‘play with their fingers’ as to make the horse softer. I don’t agree. I don’t like to fumble with the bit. Your wrist should be able to move, as should your elbows and shoulders. Opening your hands makes it easier for the horse to pull the reins out of your hands if he makes a sudden movement. The elastic contact can be maintained with a closed fist.
Some riders don’t realize they open their hands. I remember John Lasseter in England talking about holding imaginary coins in your fists. I have tried it with pupils, but actually making them hold coins ended up in too much tension in hands and lower arms. Try it just for the fun of it.
What helped me was pretending I carried two wet sponges. Squeeze too much and your pants get soaked. But don’t drop them. And I once heard someone talk about holding two baby chicks, I thought that was rather gruesome… But if it works for you, do it. Just don’t kill them. Not even imaginary, I’m a big softy.
John also liked to talk about holding two glasses of champagne while riding. Now we are talking. Point is, you have to make a fist and hold it up. Don’t fumble, elasticity in contact shouldn’t come out of your fingers. If so, your arms are too rigid. The whole system of contact is an elastic thing. It the horse is ridden the right way he’ll go soft and it feels almost like you and him are connected so well, that contact flows through your whole body. It’s a strange mixture of stability and flexibility, with your core as main ‘structural’ point.