Dear H. S. …
I’m a big believer in consistency, which I think helps readers focus on what really matters in a story without distractions. Random name-switching is soaked in distraction potential. Once you introduce the nickname into the narration, stay with it. Now, if there’s a strong theme-, style-, or story-related justification for switching, okay, fine, do it—just make sure the switching contributes to the reading experience more than flusters it. Even devices intentionally deployed can hurt instead of enhance. If you want some elbow room on this, you’ve got it with the other characters, who can switch between the given name and nickname according to their personalities and relationship to your character, just as friends and family will do in real life. It all boils down to facilitating reader focus and enjoyment.
I had a friend who was writing a fantasy adventure. She introduced six new characters in a single chapter, then provided to give each one a nickname and a third name — can’t remember why, but she had a reason. Anyway, it felt like she had introduced 18 new characters instead of six. She rewrote the chapter, introduced fewer characters, gave them nicknames that made sense, and dropped the other names all together. So much better!
Thanks for sharing that experience. Perhaps that was a process she needed to go through in order to arrive at her final, tighter version.