Legendary banker J.P. Morgan was once asked by a reporter how the stock market will do.

“It will fluctuate,” was his terse reply. But J.P. Morgan might have changed his response if he were alive today.

Over the last three years,  the market has slowly marched upward with very few swings along the way. A look at a popular gauge of market choppiness (the volatility index, commonly referred to as the fear gauge, or the “VIX”) shows extremely low volatility in the equity markets since 2012.

In tandem with the drop in volatility has been a slump in trading volume, which has been steadily falling since the financial crisis.

For discount brokerages like TD Ameritrade Holding Corp. (NYSE: AMTD) and E*TRADE Financial Corp. (Nasdaq: ETFC), low trading volume is bad for business. TD Ameritrade earns more than 40% of its revenue from trading commissions; for E*TRADE, commissions are 25% of revenue.

Yet J.P. Morgan’s insight on markets still remains relevant. Financial crises (such as  oil shocks) happen from time to time. And when these phenomena appear, trading volume and market volatility will rebound off of current low levels.

#-ad_banner-#In the first part of 2015, as investors prepared for higher interest rates, both trading volume and volatility did start to pick up, albeit slowly. Look for increased market action to continue as rates rise.  

Speaking of interest rates, lending money to traders and investors who would like to invest on margin is the other big revenue source for brokerage businesses. In fact, E*TRADE earns three times as much revenue on net interest fees relative to trading commissions.

Interest rates at current historic lows hurt all money lenders. Brokers have the advantage over other lending institutions in that these businesses can pass rate increases on to customers more rapidly than, say, a bank offering a mortgage. When interest rates rise, discount brokers will be the first to benefit.

Investing is all about catching trends early. Trading volume, volatility and interest rates are all at extremely low levels and all are showing signs of turning around. If all three do start to turn around at once, then it will be a boon for these businesses.

As attractive as E*TRADE and TD Ameritrade look, another discount broker stands above the pack in terms of growth potential.

Interactive Brokers Group, Inc. (Nasdaq: IBKR) isn’t as well-known as the other companies, because it doesn’t advertise on television via celebrity endorsements, nor does it have physical branches.

But customers are finding this broker anyway. Interactive Brokers saw a 17% gain in customer accounts in 2014, while E*TRADE and Ameritrade only saw a 3% and 5% expansion, respectively.

Limited marketing and operating expenses allows Interactive Brokers to offer some of the lowest trading costs in the industry to its customers. The company claims that trading costs on its platform are 88% lower than competitors. Despite rock bottom fees, Interactive Brokers still has industry-leading operating profit margins.

On a price-to-earnings (P/E) ratio basis, none of these stocks look particularly cheap. All three have P/E ratios above 25, and Interactive Brokers’ P/E is over 40. But remember, that price is being compared to last year’s earnings. If 2015 is the year volatility returns and interest rates rise, earnings for all these companies could explode.

Risks To Consider: All these companies offer a commodity product. Interactive Brokers’ low costs give it an advantage, but any of these companies could decide to sacrifice earnings to try to attract new customers in a fight for market share. E*TRADE has the greatest leverage to interest rates and would suffer the most if rates stayed low.

Action To Take –> As J.P. Morgan said, markets will fluctuate, and these companies will reap the profits when they do. Interactive Brokers is growing the fastest and is attracting the more sophisticated, high-volume traders. That yields greater potential for fee revenue.

If that trifecta, described above, boosts earnings, then IBKR could gather enough momentum to be flagged by the Maximum Profit system. It flags exactly which stocks are about to jump double, even triple digits in the coming days, weeks and months. In fact, academic studies have shown that momentum is one of the only indicators that has consistently outperformed the market. So far, Maximum Profit is making a small group of investors a lot of money. The system recently tagged a few more stocks that could do the same. To learn more, click here.