If your valve is a Hayward, then CLOSE simply shuts all the pipes. That won't work. Sounds like you have a leaky gasket in the valve. Have you ever replaced it? I typically replace mine at startup every year. (They are under $10).
If you have a way to divert your WASTE hose to your pool, that will keep you from losing so much water. But putting the hose in the skimmer basket is recirculating that water from the basket to the pump to the basket without mixing it much in the pool. Place the hose farther away from the basket to allow the recirc'd water to mix with the pool water.
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