With your arms in this position they should then be tight against your sides which will further prevent them from failing out to either side. The hand should then be pulled in right by your navel or chest and you should be leaning into it further at the same time. From here you then have freedom to pull to release the rope in order to move forwards and backwards as you wish.
Make sure you don’t extend your arms and lean forwards instead of leaning backwards. This way your centre of gravity will be over your skiis (or your feet if you are doing barefoot waterskiing). If you lean back too much meanwhile your feet will fly up in front of you forcing you to fall backwards. At the same time it’s important to bend your knees as this will help you to balance by allowing your to adjust your height on either side. At the same time by bending your knees you lower your centre of balance making yourself less likely to fall over and also make yourself smaller thereby making you more aerodynamic and decreasing your drag coefficient which will make you faster.