You are actually correct on this :)
The chain needs to be place up on the top loop.
I don't use the chain as abuse. I put light pressure on it and that is all I need and she will stop. I try and not hurt my horse. I love her so much but sometimes the chain is helpful. When I compete I probably won't need the chain since it will be in the arena and not where she sees all the grass,haha.
So do you guys think she would do well at local shows?