How you hold the guitar makes an impact on your playing, both in terms of comfort and how your arms/hands are positioned on the guitar. In the video above, I demonstrate how to properly hold a guitar while playing in a sitting position.
You want to sit upright using good posture. Your back should be straight and not slouched in any way. If you are using an acoustic guitar, sit so the guitar is resting on your dominant leg (meaning if you are right-handed, put the guitar on your right leg). Your dominant elbow should break right over the top/front of the guitar, and your dominant (strumming) hand should naturally fall right near the sound hole (or the pickups in an electric guitar).
Your other arm should be relaxed and hanging straight down from your shoulder, with your elbow bent at 90 degrees. This should put your fretting hand right near the headstock of the guitar on the neck.
You want your wrist on your fretting hand to be in a comfortable position – don’t try to crank your hand up or down in an unnatural way. When fretting, try to keep a good amount of space in the palm of your hand, almost like you’re holding a baseball in your hand. Your thumb should comfortably rest on the back of the neck.
Resist the temptation to angle the guitar on your body so that you can look down and see the fretboard flat (many times beginners will angle the guitar at about 45 degrees which gives easier viewing access to the fretboard). This will put your fretting hand in a very unnatural position and make playing much more difficult. Keep the guitar straight up and down.