Lightspeed Review

Our Take

While many online brokers have attempted to lure retail investors by broadening their offerings, Lightspeed and a few others remain niche. Lightspeed supports just a few asset classes (equities, options, and futures), which immediately narrows down who Lightspeed is for. Otherwise, Lightspeed is best for high-volume, active traders who can benefit from the tiered pricing—and afford the $10,000 to $25,000 buy-in.

Introduction

Lightspeed caters to active day traders, professional traders, trading groups, institutions, and hedge funds interested in the equities, options, and futures markets. The company offers several trading platforms, including the flagship Lightspeed Trader, Lightspeed Web & Mobile, and Sterling Trader Pro—a full-featured Level II trading platform with advanced charting. Other platforms include Sterling VolTrader (an advanced options trading platform previously called LiveVolX) and Eze EMS (formerly RealTick), which is Lightspeed's only platform that supports futures trading.

The core of Lightspeed's services is a stable platform with exceptional order execution. While the industry-wide push to zero-commission trading impacted Lightspeed's retail growth, company representatives say its core customers and target market understand the value and benefits of the active day trading services and technology it provides. We'll take a deeper look to help you decide if Lightspeed is a fit for your investing needs.

Pros & Cons

Pros Explained

• Lightspeed offers multiple trading platforms (Lightspeed Trader, Sterling VolTrader, Eze EMS, and Web & Mobile) to choose from, depending on your preferred trading instruments and features.
• Customers who meet monthly trading volume thresholds qualify for Lightspeed's Active Trader Commission Group pricing, which can run as low as $0.001 per share and $2.50 per trade on equities, $0.20 per options contract, and $1.29 per contract/per side for futures.
• Lightspeed's order router is exceptionally fast. It uses a proprietary algorithm designed to produce the best execution by rotating through different exchanges and routes.

Cons Explained

• The initial funding requirement for Lightspeed Trader accounts is $25,000. The minimum is $10,000 for Lightspeed WebTrader accounts—unless you are a pattern day trader (PDT), in which case it's also $25,000.
• Traders who don't meet the volume threshold for discounted commissions pay more: $0.0045 per share or $4.50 per trade for stock and ETF trades, $0.60 per options contract, and $1.29 per contract/per side for futures.
• Accounts that fall under $15,000 in value will be charged a $25 per month maintenance fee.
• The high account minimums, high standard commissions, platform fees, and lack of "easy" tools make Lightspeed a less than ideal choice for new investors. Also, the lack of bonds and mutual funds means the broker may not appeal to casual investors looking for a diversified portfolio.

Usability

Lightspeed's website is basic and straightforward to navigate, and you can easily open an account online. During the account opening process, you create a user name (typically your email address) and password, choose the trading platform you want to use, and select the appropriate account type (individual, joint, LLC, corporate, partnership, or IRA). You'll also answer a series of questions to determine your status as a professional or non-professional trader.

Lightspeed's downloadable (and flagship) trading platform, Lightspeed Trader, is designed for active traders, hedge funds, and institutions. It offers direct-market access and can be configured so your favorite tools and widgets are always on top. Lightspeed Web/Mobile Trader is more straightforward than the downloadable version and is suitable for occasional traders. Sterling VolTrader is another platform, which is specifically designed for options evaluation and trading. Futures traders use the Eze EMS (formerly RealTick) platform.

Lightspeed's mobile app is available for Android and iOS and is less robust than many trading apps out there. It's primarily intended for closing trades. The app supports the same asset classes as the desktop and web platforms. You'll find streaming data—but you can't stream data on multiple devices at the same time. The app comes with other limitations, as it doesn't offer news, research, or drawing tools, and you can only place limit and market orders.

Trading Experience

Lightspeed Trader, the company's flagship trading platform, is intuitive and customizable. Two buttons at the top of the screen make fast work of switching between the equities trading and options trading layouts. It's simple to launch windows for tools like scanners, watchlists, time & sales data, Level II data, risers & fallers, and the short locate feature. 

You'll find a limited selection of technical indicators and drawing tools and a decent variety of chart types and time frames. There are numerous order entry options, so you can build your order to your exact specifications—and choose from dozens of trade defaults and hotkeys to get your orders to the market faster.

You can trade equities and options on any of the platforms, but you'll need Eze EMS or efutures (powered by CQG) to trade futures. Options traders may prefer the Sterling VolTrader platform, which is geared toward monitoring risk.

All platforms offer streaming real-time data—but only on one device at a time. You'll find Level I quotes on all the platforms and Level II quotes on all but Web & Mobile. You can enter multiple orders simultaneously on Lightspeed Trader, Sterling VolTrader, and Eze EMS, and Eze EMS lets you stage orders for later entry. 

Mobile Trade Experience

The mobile trading platform offers most of the same functionality as Lightspeed Web. It features real-time streaming data and all your account details, but it doesn't have the powerful analytics built into the downloadable platform. You can trade equities and options, but not futures, on the mobile app.

Range of Offerings

Lightspeed is geared toward active traders, and its platform focuses on stocks, options, and futures (you need a separate account to trade futures). The company doesn't offer commission-free ETFs, forex, or mutual funds, and its fixed-income opportunities are limited to T-bills traded via a live broker. Fractional shares are not supported. Investors using Lightspeed can trade:

• Stocks long and short (about 6,000 on the easy-to-borrow list for short sales) 
• OTCBB
• Futures/Commodities
• Futures options 
• Simple and multi-leg options (up to four legs)
• T-bills (via a live broker)
• Cryptocurrency

Order Types

All Lightspeed platforms support stop limit orders and trailing stops. The Eze EMS platform (formerly RealTick) supports one-cancels-the-other (OCO) and bracket orders, and you can enter "if touched" orders on Lightspeed Trader. The web and mobile platforms are limited in terms of order types as they only allow market and limit orders.

You can stage orders for later entry on Eze EMS and enter orders simultaneously on Lightspeed Trader, Sterling Trader Pro, and Eze EMS. It's not possible to select a tax lot before placing a trade; closed positions default to first-in-first-out (FIFO).

Trading Technology

Lightspeed gives you the option to route your order directly many different venues, including several dark pools. You can also select Lightspeed's smart order router (aka "LSPT route"), which uses a proprietary algorithm designed to provide the best execution by rotating through different exchanges and routes. It primarily sequences orders using a sequential router, but it occasionally uses spray technology. Overall, you can expect exceptionally fast order executions. A company spokesperson tells us the order router is primarily geared towards speed of execution, but it also seeks out price improvement.

Lightspeed doesn't track price improvement, and the platforms don't support any backtesting or trade automation capabilities.

Costs

Lightspeed offers different commission plans based on trading volume. If you meet monthly trading volume thresholds, you may qualify for discounted commissions through its Active Trader Commission Group (you must contact the company to join the program and determine the rate for which you qualify). Per-share rates range from $0.0010 to $0.0045, depending on monthly volume, and per-trade rates fall between $2.50 and $4.50—again, depending on how much you trade during the month. Options are similarly tiered (the rates are below).

Traders who don't qualify for the Active Trader Commission Group can trade stocks and ETFs for $0.0045 per share (with a $1.00 minimum) or $4.50 per trade. Options are $0.60 per contract ($1 minimum), and futures cost $1.29 per side (plus exchange fees).

The costs listed below assume the standard per-share and per-contract commission rates for Lightspeed Trader or Lightspeed Web Trader.  

• Cost to trade one share is $1.00. The cost to trade 1,000 shares is $4.50
• OTCBB commission is $10.00 per transaction with no share cap
• Options base commission to open and close is $0
• Options per contract fee is $0.60 with a minimum of $1.00 per transaction 
• Fee for 50 contracts is $30.00
• Covered call trade of 500 shares plus five contracts is $5.25
• Margin interest at $0-$50,000 balance is 9.75% and 7.25% at $1,000,000
• Accounts that fall below a $15,000 balance must generate $25.00 per month in commissions or pay the difference
• Crypto is now available through Lightspeed Crypto with no transaction fees
• No account closure fee
• ACAT out fee is $95.00
• Exercise and assignment fee: $20.00 
• No deposit and withdrawal fee
• Wire fees: $20.00 domestic, $50.00 international
• IRA opening fee: $20.00. IRA annual fee: $35.00 
• Check fees: free unless overnight or Saturday delivery, which are $30.00 each
• Price per futures contract open and close is $0.60 per contract, per side 
• Software access fee for Lightspeed Trader is $130.00 per month, reduced based on trading activity
• No ETFs trade commission-free 
• Live broker trading is available for an additional $20.00 per transaction
• Paper statement fee: $5.00
• Paper confirmation fee: $2.00

How This Broker Makes Money From and for You

Unlike many brokers, Lightspeed hasn't jumped on the zero-commission trend. Besides commissions, here are some behind-the-scenes ways Lightspeed makes money from you—and for you.  

• Interest paid on cash: Lightspeed earns interest on its customers' uninvested cash, but it doesn't share any of those earnings with account holders.
• Interest charged for margin: Lightspeed's margin interest rates are lower than many other large brokers. You'll pay 9.75% on a $0-$49,999 balance and 7.25% on $1,000,000 or more.
• Stock loan programs: Lightspeed earns money by loaning stocks in your account for short sales—with your permission, of course—and it shares that revenue with you. The firm did not provide us with any details about potential earnings from its stock loan program.
• Payment for order flow: Lightspeed participates in payment for order flow (PFOF)—a practice where brokers accept payments for directing orders to specific market makers.
• Price improvement: Lightspeed did not disclose its price improvement details.
• Portfolio margining: Lightspeed clients who qualify can apply for portfolio margining, a risk-based method of computing margin requirements. Typically, portfolio margining works best for customers who trade derivatives that offset the risk inherent in their equity positions.

Account and Research Amenities

Lightspeed has limited account and research amenities compared to other large brokers.

Stock Screener

Lightscan, Lightspeed's market scanner, is an integrated market scanning and filtering tool for U.S. equities and options. It has about a dozen customizable criteria, including net change, % change, price range, and volume.

ETF and Mutual Fund Screener

Lightspeed does not have an ETF-specific screener or a mutual fund screener (this is to be expected as the broker doesn't support mutual fund trading).

Fixed Income Screeners

Lightspeed does not have a fixed-income screener (again, this is to be expected as the broker doesn't support bond trading).

Tools and Calculators

Lightspeed does not have any calculators, but it offers several trading tools to help you identify active and potentially mispriced options and equities. These include Vertigo, which identifies activity based on trading imbalance parameters (i.e., puts/calls and buys/sells).

Trading Idea Generator

Lightspeed offers numerous trading idea generators and ways to find your next trade. These include “Social Media Analytics”, “TipRanks”, “Gap List Scan”, “Block Trade Scan”, “Risers/Fallers Scan”, “Most Active Scan”, “Order Imbalances”, and “Halted Symbols”. Options traders who use the Sterling VolTrader platform have access to a wide range of options analytics and trade idea generation features.

News

Customers have access to a streaming, professional news feed that is included in the basic market data package ($13.00 a month for quotes and news for non-professionals). The headlines come from a variety of news sources.

Third-Party Research

Customers have free access to TipRanks—a valuable add-on that evaluates stock recommendations made by financial analysts and other professionals and then ranks those experts based on accuracy and performance. TipRanks is integrated into the Lightspeed Trader front end to help drive trade idea generation. It can also be found in the client center on Lightspeed's website, allowing analysis access for all clients regardless of their preferred trading platform.

Charting

Charts stream in real-time, and you can customize colors, the chart type (area, candle, bar, line, OHLC, and table), and the period (time-based and volume). Lightspeed offers market depth and most of the usual suspects when it comes to technical indicators, plus a variety of drawing tools.

Cash Management

Lightspeed does not automatically enroll customers in a cash sweep program.

Fractional Dividend Reinvestment Plan (DRIP)

Dividend reinvestment is not available.

SRI/ESG Research Amenities

Lightspeed does not enable customers to screen based on environmental, social, and governance (ESG) or socially responsible investing (SRI) factors.

Portfolio Analysis

The Lightspeed platform is designed for active traders. Owing to this focus, the broker provides limited portfolio analytics. Buying power statistics display in real-time, and various tools help you stay on top of your daily profit and loss numbers. Performance reports track profit and loss by the underlying symbol for both equity and options trades. You can export your daily transactions to Excel for further analysis.

In September 2020, the company launched Lightspeed Risk, a risk management tool that lets you monitor profit, loss, halted trading symbols, and real-time trading activity. You can also access an automated, real-time short locate system. You can view risk estimates by symbol, strategy, or portfolio in a tabular or graphical format. You can also view an estimate of your portfolio margin requirements based on current positions and real-time market data. This is a unique tool and especially useful for high-velocity traders who use margin.

Lightspeed does not offer a trading journal, and you can't attach notes, graphs, or other market data to trades. However, balances update overnight, and profit/loss changes occur in real-time. Lightspeed does have a trade blotter that lets you export trade data in a format accepted by various tax software packages, including TurboTax and TradeLog (designed specifically for active traders). You can also view a year-end statement equivalent to Schedule D or Form 1099.

Education

Lightspeed is not the place to go for fundamental trading education. That said, you'll find a decent glossary, FAQs, product tutorials, the Active Trader blog, and various educational articles on trading basics, options, and so on. You'll find futures contract details under the Resources menu. The company offers one to two live webinars a month, and recorded trading tutorials and videos are available on demand.

Customer Service

• General phone support is available from 7:00 a.m. to 6:00 p.m. Eastern. The trade desk is open from 4:00 a.m. to 8:00 p.m. Eastern.
• Live brokers available during trading hours.
• No online chat.
• No chatbot.
• According to Lightspeed, phone calls are answered immediately under normal circumstances.

Security

• Two-factor authentication is available for Lightspeed Trader.
• Biometric entry for the mobile app is not available.
• Excess Securities Investor Protection Corporation (SIPC) coverage is provided by Lloyd's of London for up to $25.5 million in cash and securities for each client account, subject to an aggregate loss limit of $100 million. Lightspeed Financial Services Group LLC's SIPC coverage is available only for securities and cash held in connection with the purchase or sale of securities in equities and equities options accounts.
• The company reported no recent platform outages.
• The company reported no significant breaches.

Transparency

Lightspeed's website clearly states details about commissions, leverage, and margin trading. High-volume traders must contact Lightspeed to determine the discounted rate for which they qualify.

In early 2021, the Securities and Exchange Commission (SEC) found Lightspeed guilty of securities fraud for misleading customers and profiting from lower "market center fees" charged by its affiliate for executing trades. 

According to SEC documents, "Lightspeed told its customers they could direct their orders to the trading venues of their choice and they would be charged the market center fees that Lightspeed incurred in executing their orders. In reality, Lightspeed disregarded many of its customers' directions and instead sent those orders to an affiliated broker-dealer (the "Routing Broker"), which routed the customer orders for execution and generally charged Lightspeed no or low market center fees. Lightspeed failed to disclose the Routing Broker's involvement and never disclosed to its customers that it routed their orders in contravention of their directions. Despite misdirecting its customers' orders, Lightspeed still charged its customers the fees for the market centers that they had selected, even though Lightspeed incurred lower fees or no fees at all."

Lightspeed was fined by the SEC for the violation.

Available Account Types

Lightspeed offers all the commonly used account types, including:

• Individual and joint taxable trading accounts
• Traditional individual retirement accounts (IRAs)
• Roth IRAs
• Simplified employee pension (SEP) IRAs.
• Corporate trading accounts
• Trust accounts
• Limited liability company (LLC) accounts aimed at entity traders rather than individuals
  

Final Verdict

Lightspeed is a good fit for high-volume equities, options, and futures traders. The company offers a suite of innovative trading tools, flexible order types, and a choice of trading venues. Its flagship platform, Lightspeed Trader, is intuitive and has numerous customization options—plus enough hotkeys to keep your hands off the mouse (and speed up your trades).

Beyond the active trader crowd, however, Lightspeed’s relevance is limited. Due to the high buy-in costs, high prices for casual traders, and lack of "easy" tools, Lightspeed is not the place for beginner or intermediate traders. Still, if you're outgrowing your current trading platform and want to take your trading career to the next level, Lightspeed may be worth a closer look. It is noteworthy that while Lightspeed did see its overall star rating fall from last year's review, this is more a reflection of the company's strong offering being geared toward professional traders rather than the retail traders that our updated model focuses on.