DislikedI also cant see why anybody would hedge, because right at that moment you`re taking the loss and your equity will be down isnt it?
without a hedge your margin will be higher.
so what is the advantage of hedging?Ignored
There are a few startegies that employ same pair hedging; ie grids, but there is also the strategy that basically allows you to wait for the primary trend to develop.
Many say that what is the point since you might just as well re-open the position again. The point is that you are in the market. If you run a demo, then there is no benefit, but if you are trading a real account, keeping the position keeps you in tune with the market rythym.
A more effective way to hedge is to use highly correlated instruments, ie EURJPY and GBPJPY with addition or EURGBP.
http://en.wikipedia.org/wiki/Triangle_arbitrage.
Which is also a way for US residents to freeze their positions over night or any period of time.
When applied correctly this allows you to minimize your risk, and take advantage of the market cycles.
For example Short GBP/JPY long EUR/JPY and Long EURGBP.