Hedging can be costly and risky, unexpectedly and beyond timely comprehension!? http://bigthink.com/econ201/when-is-hedging-more-like-speculation
I don't see opportunities for hedging on forex. You can just worsen your position and drive your account to deeper loses, IMO. Better to use tight SL's to protect you from volatility.
Hedging is like the car insurance and you have four teenagers using the car. Hedging is like a farmer growing corn and uses the futures markets to sell at top prices before harvest. Hedging is like a trader who got beaten up like opponents of Mile Tyson, discovered the "trend is not your friend" in the beginning, but knows reversal is due. Hedging is a way to insure you won't go belly up when you believe in the stats of your Trading Plan is right. You spend long enough time studying, thinking, back testing, and KAZAAM, you figure it out, how to do it without ruining you. There is risk in everything we do, but what most people don't study and read is risk management. And there are no simple books on risk management, although I have not bought a book in past five years on financial markets that I can remember. It is just like retail day trading, you have to do 100% return in a year to breakeven on fees. If you don't plan on breakeven plus one tick, most newbies will be having losing year and account. That making one tick to pay for fees can be considered a hedge of being wiped out.
Q: What is hedging? A: Hedging is insuring against potential loss. Most hedging is voluntarily but some are compulsory such as auto insurance. Credit Spreads and Debit Spreads are a form of hedging.
I use hedging when position trading and my position is in profit, but hasn't quite reached a target and it looks like price could bounce and potentially reverse.