Editor's note: "Bull market I win, bear market I also win."

It's hard to imagine making money regardless of where the market heads next. But as DailyWealth Trader editor Ben Morris explained yesterday, it's possible with a strategy called "pairs trading."

In today's Masters Series – the final installment of an exclusive two-part interview – he walks readers through two real-life examples... discusses all of the potential types of pairs trades available to investors... and explains why even skeptics should give this strategy a try...

How to Make Money, Even If Stocks Fall 20% Tomorrow

An interview with Ben Morris, editor, DailyWealth Trader

Sam Latter: When you're looking for pairs trades, how do you go about finding them? Is it possible to pair up every single company?

Ben Morris: You can make a pairs trade out of any long or short investment. It just depends on what risk factor you're looking to take out of the equation.

If you wanted to buy iPhone maker Apple (AAPL), for example, but you were worried about tech stocks in general, you could short an exchange-traded fund ("ETF") of tech stocks. Or you could short a weaker tech stock, a company whose sales were slowing. The possibilities are practically endless.

But what I generally look for when I'm searching for a pairs trade is a clear trend in the market. I kind of alluded to that with the ETFMG Prime Mobile Payments (IPAY) and Western Union (WU) example. The trend is toward digital payments and away from expensive, inconvenient payments that require you to go to the store and speak to someone.

Sam: How about another example of a good potential pairs trade?

Ben: You've probably heard of a company called Stamps.com (STMP). This company lets you go online and print postage. It's super easy for businesses of all sizes. Stamps.com is a great alternative to dealing with the hassle of going to the post office and waiting in line.

Now, this is an unusual pair that a lot of people wouldn't think about, but another company called Pitney Bowes (PBI) makes these big, clunky machines that sit in offices and take up a ton of space. They weigh your mail and put postage on it. These machines are often enormous and could soon be obsolete.

As you might imagine, the stock has been falling for years. But the overall trend in mailing is that Stamps.com is convenient and growing... and Pitney Bowes is cumbersome and slowing. These sorts of reliable trends are the types of setups I look for in a pairs trade.

Sam: So far we've talked about taking the opposite side of the same coin – buying a strong company and shorting a weak company. But what if you're pairing two stocks from totally different industries? How do you determine whether something like that makes for a good pair?

Ben: I prefer to look in the same industry, but you don't have to do that. As long as the two companies trade in tandem with the stock market – which really most companies do – you can still get the effect of reducing or eliminating volatility from the stock market. To give you an example – and to be crystal clear, this is not an example – you could buy Apple and short a company in a different industry, like clothing retailer Kohl's (KSS), or something.

If the stock market soars, chances are good that Apple and Kohl's probably will rise. But Apple will probably rise more. If the market crashes, they'll likely both fall. But Apple will probably fall less. So stocks don't have to be in the exact same industry to get that effect of reducing your overall volatility.

Sam: Can you use different dollar amounts for these trades, or do you only recommend using the same amount of money for both sides of the trade?

Ben: This is a tricky question, and it gets into more advanced strategies. You can use different dollar amounts. Like let's say you wanted to pair a big relatively stable stock like a Walmart (WMT) or Apple with a smaller, more volatile stock. If you were looking to reduce volatility more, you might buy or short more of the bigger, more stable stock and have a smaller position in the more volatile one. In general, though, I think it's best to keep equal dollar amounts in each.

Sam: I know a lot of our readers get nervous about short selling, and most of them have never even tried it. Or maybe they think it's not right for them. What would you say to someone who's hesitant to try out one of these pairs trades?

Ben: The first thing I'd say – which Porter says all of the time – is to start small.

You can short a single share of stock if you've never done it before. Sure, you'll pay $5 in commissions. But it's not a big deal. Once you sell a stock short, you'll see that it's very simple. It's really no different than buying a stock. I actually just created a quick video for my DailyWealth Trader readers to show them exactly how to short a stock. Start small. Try it... You'll see it's not so scary.

Aside from that, I take wealth protection seriously. I lost a lot of money in the last market crash, and I don't want any of my readers to experience that. If you're serious about protecting your wealth, you might have to step out of your comfort zone a little bit and try something new.

It's worth learning the new skill to protect yourself. We're more than nine years into this bull market. If you want a chance to preserve your wealth or make money in the coming years, you need to learn how to short stocks.

The last thing I'll say is this... If the stock market pulls back tomorrow and you open a new position with a 20% stop loss, you might lose 20%. That's a major loss. With a pairs trade, stocks could drop 20% tomorrow and you could still make money.

If you're not too comfortable with it, start small. Put a few hundred dollars into each side of the pair and see how it goes for a month. As you get comfortable with it, you can put more money into it.

Sam: Another option is that if you're betting on or against sectors, you could buy an inverse ETF... something that goes up when oil stocks go down, or something that goes up when gold stocks go down.

Ben: That's true. If you found a pairs trade that you liked where you were buying, say, an oil stock and shorting a larger group of oil stocks, you very well could just buy the stock itself and buy the inverse ETF and have the same effect. You're more limited in your ability to structure different pairs trades, but you could certainly put on pairs trades with some inverse ETFs.

Sam: Ben, you've been super generous with your time. Is there anything else that you wanted to cover before we let you go?

Ben: I want to note again that we just crossed into the longest bull market in U.S. history. Whether we have another six months or two more years left, at some point, stocks are turning lower. I want people to be prepared. And pairs trades are a fantastic strategy no matter what the market does next. You can make money on the way up and on the way down.

Sam: Well, this has been great. Thanks so much for taking the time to speak with us.

Ben: It's my pleasure, Sam.

Editor's note: We can't predict the next crash. But we can be ready for it. That's why Ben just released a brand-new presentation explaining how pairs trading can help you make thousands of dollars on your favorite stocks... no matter what the market does next. It's one of the best and safest ways to make money in this uncertain market. And for an extremely limited time, you can gain access to all of Ben's pairs trades at a 40% discount to the regular retail price. Find out how by clicking here.