There are various ways of holding the guitar, and all work. The key requirment is that you maintain good posture as you play. Over time, poor posture plays havoc with your body, and you can develop repetitive strain injury.
Having said that, here is how I hold it. This method was learned from a Flamenco teacher a quater of a century ago.
Assuming that you are playing a standard right handed guitar, keep the neck of the guitar on your left. Play the frets with your left hand to make chords, scales and riffs. Pluck or strum the strings with the right hand.
- Sit erect on a somewhat firm chair without arm rests
- Put the lower bout (the round part of the body at the end) on top of your right knee.
- Stabilize the guitar against your chest.
- Put the ball of your left thumb on the middle of the back of the neck.
- your back reasonably straight,
- your shoulders relaxed,
- your elbows dropped and relaxed, and
- your neck upright (this assumes that you can play without looking at the fingerboard. If you can’t you will have to compromise.
The common variations on this include:
- Guitar suspended from a neck strap (common with electric guitars played while standing)
- Lower bout on the outside of your right knee ((most common of all the methods)
- Lower bout on the inside of your left knee and left foot raised on a little footstool (classical guitar method)
- Left thumb wrapped around the neck (common, but seems to limit the ability to stretch the fingers).