Hedging can be more complicated than you think and can prove counterproductive to the protection you are seeking to derive from it if you don't enter a hedge with precise timing of market momentum. Mastergunner give good advice here: hedging is something in your tool kit, but it's advisable to leave it there until you've attained some real proficiency in whatever method or system you decide.
Hedging should always be
strategic - meaning you should incorporate a provision for it in the money management rules of your method/system - never a knee-jerk, what-can-I-do-to-save-my-capital-from-the-unrealized-drawdown-I've-stumbled -into decision. This lack of structure can and most probably
would prove your enemy rather than your friend.
The debate over trading with or without stop losses has been (and will continue to be) discussed over and over - there are plenty of old thread from which to glean opinions, ideas and strategies to be found by doing a search. Stops exist, whether in your mind or as set up on your trading platform. Because "aversion to further losses after a point
x" is a function of your psychological makeup (and instinct for self-preservation!), it is something you cannot get away from. Rather than trying, bring stops out into the open and systematize them somehow: know why you set that "20/30 pip stop loss" rather than just doing it, or worse, not setting one at all and stopping yourself out with a flattening trade that was all decided on in your stomach.
Using a static number for a stop loss is a great idea as one starts out trading. With some experience, setting stops should become relative to market conditions; e.g. placing a stop 10 pips below a resistance level is likely to result in being pulled out of that trade, whereas setting the stop 10 pips above the resistance point lends your trade a higher likelihood of continuing.
I'm not dissuading anyone from using hedging in any cirumstance or at all costs. If you are trading demo, trying experimenting with it; but if you are live and care about your capital, hammer out the fundamentals of how you intend to trade and then do it profitably before tinkering with more sophisticated loss-mitigating tactics.
As always, we each operate self-directed accounts, so this is ultimately left to the trader's sole discretion.
