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A fretless guitar is a guitar without frets, such that fingering its strings at particular positions on the string is done by pressing the string against its fingerboard. A "fretboard" in fact is just a fingerboard with inlaid frets, hence the principles for fingering the fretless is almost the same as the fretted, but with three exceptions 1) the position where the finger marks the string is not as exact as in fretted instruments, requiring greater finger position precision, and 2) the resonance of strings is different and may require more apt plucking or modified amplification (pickups) to achieve desired volume, and 3) the smooth form of the fingerboard allows for slides between notes which are natural and not notched to particular notes.
It operates in the same manner as most other stringed instruments and traditional guitars, but does not have any frets to act as the lower end point (node) of the vibrating string. On a fretless guitar, the vibrating string length runs from the bridge, where the strings are attached, all the way up to the point where the fingertip presses the string down on the fingerboard.