Hi, RedTree ... What you are experiencing is not that uncommon. When you grip with the front of your thigh, your knees close and your lower leg does not stay in contact with your horse's barrel. This creates an unstable seat and your brain tell your body to hold on by drawing our knees up and, eventually, going "fetal".
You can change this pattern by practising the half-seat position - the hip angle closes slightly and the seat lifts slightly out of the saddle. There is still some contact between your seat to the saddle. You are half way between the 3 point and the 2 point positions. To improve your stability, you practice this standing still, then at the walk, then at the trot and then over poles. At first, you may need to rest your hands on your horse's neck to support yourself. Then you take your hands off the neck so that you are using your legs.
Check out this article for more information and exercises to practice this important riding position. The Riding Position Every Hunter Rider Needs to Master
If you have questions, I'm happy to answer.