First of all, your hand position is good. The hands do not need ro be raised. Second of all, soft contact comes from the arm, not the hand. The hand should always be closed on the rein with the shoulders rolled back and anchored "into your back pockets". This strong position, but still with soft arms, will discourage the horse from pulling you. If he pulls or jerks and you stay right where you were with only your arms giving, he'll soon get bored. Keep working on transitions, transitions, transitions to get him more responsive to lighter aids. Try to see if you can get him to respond to you barely aiding him to slow down or stop, and without rein aids.
I think as soon as your upper body position is solidified as one peice (think - your hand is stronger than just one finger) and as you work on doing more transitions he will become more responsive to your "slow down" aid and balancing half halt.
They say money doesn't buy happiness -- well happiness doesn't buy horses!