There is hedging and there is diversification, both of these terms are interchangeable at times. Hedging could be where one is spread across different assets with out the goal of making profit, but with the goal of retaining capital. Another could be the idea of retaining capital, but with advantage of timing the movements and collecting gains from that. Diversification would more often be thought of being spread across the markets for the purpose of making gains, but still having to rely on and edge to produce those. Otherwise on still has the risk of being on the wrong sides. Most "hedge" funds are nothing more than a "hedge" in title. They are more of a Diversified fund, otherwise there would not be the sales pitch of possible gains.
I wouldn't exactly equate hedging with diversification. You might not have enough funds to diversify, so you're forced to trade only 1 or 2 instruments. How do you hedge? You could buy stock and hedge with options or single stock futures. You could buy ETF and hedge with options or index futures. Or simply buy and sell the opposite (if you were trading forex, for instance). If you're more into long-term investing, you might wanna look up "risk parity portfolio construction" and "modern portfolio theory" (beware: heady stuff with lots of math).
I think he is talking about currency hedging that many traders do in Forex. At first, traders have to consider whether their brokers allow them to hedge or not.
Simply throw the hedging book into the burning fireplace. If you long a particular currency, have a Sell Stop in place. If the price goes up, good for you. If the price goes down and hits your STOP, you are out of the market. When the price is going down and down and down and down, you don't - HODL hold on to dear life hoping the price will go up - hedge with other financial instruments Those who like hedging the most are the Hedging book Publishers.
Okay, I see that he posted in the "forex" section. I often just reply to posts that show up on the main page of this site and don't always bother with where it belongs. Anyway, my previous reply still stands. There are forex options, forex futures that you can use, as well as taking the trade in the opposite direction. For examply, if you're currently trading USD/JPY, you will then open JPY/USD to hedge. However, unless you're a whale with big positions, it's best to practice good money management and simply close your losing trade as @maxinger stated just above this post. Once you start dabbling in hedging for all the wrong reasons (because hedging itself is by no means easy), you'll only foster bad habits that will eventually lead to further losses and many sleepless nights.
Hedging means holding positions on both sides and leave either side when it feels like gaining in price.