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Broker Reviews

Lightspeed Trading

Published by
On Monday, July 7th, 2014 .

Overview

Lightspeed caters to one type of investor, the hyperactive trader, and provides the tools required to succeed.

Dislikes

No support for mutual funds or bonds; trade platform not suitable for the casual investor; very basic website; miscellaneous trade fees.

Special Offer: Free trading platform trial - Learn More

Lightspeed Review

For first-time visitors to the Lightspeed website, feeling confused is a common occurrence unless you can speak the lingo of Lightspeed's target market, the active trader. The homepage is littered with lingo first-time investors rarely see, let alone speak: direct market access, high-speed execution and hyperactive, to name a few.

Lightspeed is one of the few online brokers whose goal is to avoid newer investors and those with little experience. The definition of "active trader" has a different meaning at Lightspeed compared to other big names like TD Ameritrade, ETRADE, Scottrade and Charles Schwab. At Lightspeed, clients trading thousands of round trips per month is not uncommon.

For investors seeking retirement calculators, third-party reports or stock education, Lightspeed has little to offer. For those wanting top-tier executions, low prices and speed, however, then welcome to your new paradise.

Commissions & Fees

Starting off with the top selling point for Lightspeed, its pricing structure, there is a lot to take in. The first decision clients must make is whether or not they want direct market access (DMA) or not. Opting for DMA is the broker's primary offering, granting clients access to their main platform, Lightspeed Trader. The alternative, flat-fee trading through Lightspeed WebTrader, is designed to be a straight-forward, simple solution for those seeking to place trades with little flexibility and hand-holding.

In this review, the focus is on the direct market access "per share" structure, as it is built to cater to active traders. Equities trades run just $.0045 per share, plus/minus routing fees, which are updated nightly and posted on the website ($1 minimum). For traders who place larger orders, a $4.50 flat-fee option is also available. Option traders pay $.60 per contract.

One of the important notes about Lightspeed, shared by only a select number of brokers, is that Lightspeed does not receive payment for order flow. Instead, they kick back all market rebates (and charges) to the client, giving seasoned traders the ability to keep costs extremely low.

By adding liquidity through using limit orders, clients receive the full market rebate, which typically averages around $.002 per share. So, take for example a 2,000 share buy limit order of Facebook (FB) stock routed to the NASDAQ. The upfront commission charged by Lightspeed would be $4.50 for a flat-fee trade, then the trader would receive a $4 rebate from the NASDAQ (2,000 shares x $.002), bringing the total cost of the trade down to just $.50.

While the majority of online brokers keep these rebates for themselves, known as receiving payment for order flow, Lightspeed gives it back. It's because of this focus on pricing first and profits second that Lightspeed placed No. 2 overall in our 2014 Broker Review for Commissions & Fees.

Lightspeed TradingInteractive BrokersTradeStationMB TradingOptionsHouse
Stock Trade Fee (flat)$3.00N/A$9.99$4.95$4.75
Options Base Fee$0.00$0.00$0.00$0.00$8.50
Options Per Contract Fee$0.60$0.70$1.00$0.95$0.15
Commissions & Fees

Platforms & Tools

Lightspeed's flagship platform, Lightspeed Trader, is a desktop-based platform that is designed solely for speed, stability and execution. While not the prettiest of platforms (it certainly would place last in any beauty pageant), the platform serves its purpose.

The learning curve is not too rough, however, ample trading experience is required to take advantage of all the order routing capabilities. Hotkeys are customizable down to order size, type and routing instructions. Even the data is directly fed into the platform, showing that truly every millisecond matters to the broker and its clients.

Lightspeed platform hotkeys

Beyond placing lightning fast trades, however, the platform has little to offer. I found the charting to be just okay, and the tools were certainly lacking. Users of TD Ameritrade's thinkorswim platform or TradeStation will feel as if they are back in the Stone Age.

Lightspeed platform charting

Furthermore, there is no absolutely no research offered, and the options trading functionality, while dramatically improved with the most recent 2013 enhancements, still lacks quality theoretical analysis tools offered by competitors.

Lightspeed also offers a web version for basic trading, however, it is designed to simply place trades and nothing else.

Overall, Lightspeed's platform is designed for professional investors to efficiently trade and do their jobs without any delays. In the world of hyperactive trading, every penny and second matters, and not having perfect fills each time is unacceptable.

Customer Service

Lightspeed offers both phone and email support. The online broker used to offer current and potential clients access to live chat support, however, the service was shut down in mid-2012.

When it comes to Lightspeed's phone support, the broker consistently delivers with speedy connection times under a minute. In our 2013 Broker Review, the broker received one perfect test score, impressing us by handling our "wealthy client" template to perfection. Another time, a customer service rep answered our initial questions with ease, then transferred us to a sales specialist to answer our platform questions.

In our 2014 Broker Review, Lightspeed's email support was a bit sporadic: Our quickest responses came back in only one hour, while the longest was nearly 24 hours. Furthermore, we found that the broker's emails were often informal and lacked in consistency.

Overall, Lightspeed support reps have a tendency to answer questions quickly and to the point, which could be explained by the fact that Lightspeeds clientele is all-business all the time. With that said, the broker has room for improvement. Standardizing its templates could go a long way to improving the experience on the whole.

Other Notes

Lightspeed does not offer any mobile trading support, nor does it offer any research beyond some basic technical analysis insight. Mutual funds are not supported for trading, and the broker's educational offering is very weak, which one might expect from a broker dedicated to professional traders.

Although Lightspeed lacks in more mainstream "retail" investor offerings, it thrives in its offering for complex trading. The broker's institutional arm offers algorithmic (algo) trading through its Lightspeed Trader API and black box developer kits, both often used only by hedge funds. The broker also offers grey box trading in a partnership with Trade Ideas, allowing clients to create and back-test their strategies, then use Lightspeeds API to automatically trade them.

Closing Notes

Lightspeed is not an online broker built with new investors in mind. Instead, it caters to the hyperactive trader, professional investors and institutional investors alike, all looking for quality executions, heavily discounted commissions and a dependable platform built to serve one purpose: trading.


Blain Reinkensmeyer

Reviewed by

Blain has been involved in the markets for over 12 years, heading StockBrokers.com equity broker research and reviews. His personal blog, StockTradingToGo.com, provides to-the-point daily market recaps to over 17,000 subscribers.

Commission Notes

It should be noted that Lightspeed offers two trade platforms: Lightspeed Web Trader and Lightspeed Trader. The Web Trader platform requires only a $5,000 minimum deposit and designed for low activity customers. The Lightspeed Trader platform requires a $25,000 minimum deposit and is designed for active traders seeking the best possible executions and data speeds.

Lightspeed offers per share pricing alongside a per trade rate. Throughout the StockBrokers.com website we display the Lightspeed Web Trader flat per trade rate. Full commissions schedule breakdown below.

Stock Trades

  1. Lightspeed Web Trader - $3 per trade flate fee (up to 50k shares order size). Phone orders are $20 + standard commission rate.
  2. Lightspeed Trader - All stock trades are $.0045 per share or $4.50 per trade flat ($1 minimum charge) plus/minus applicable market center fees. OTCBB trades cost a flat $10 per order.
  3. $.005 Per Share Flat Rate Plan - All stock trades are $.005 per share ($1 minimum charge). OTCBB stocks are $10 per trade.

Options Trades

  1. Lightspeed Web Trader - $.60 per contractwith a $3 minimum order charge.
  2. Lightspeed Trader - $.60 per contractwith a $1 minimum order charge.

All excercise and assignments cost $25.

Mutual Funds - Mutual funds are not currently offered by Lightspeed.

Other Investments - Lightspeed also offers futures and forex trading.

Retirement Accounts - Lightspeed offers retirement accounts but charges a $35 annual fee.

Trade Commissions Breakdown

$3.00 Stock Trade Fee (flat)*
$0.0045 Stock Trade Fee (per share)*
$0.00 Options Base Fee*
$0.60 Options Per Contract Fee*
$15.00 Options Exercise Fee
$15.00 Options Assignment Fee
N/A Mutual Fund Trade Fee
$25.00 Broker Assisted Trades Fee
$5,000.00 Minimum Deposit

Margin Rates

6.00% Under $24,999.99
6.00% $25,000.00 to 49,999.99
5.00% $50,000.00 to $99,999.99
5.00% $100,000.00 to $249,999.99
4.25% $250,000.00 to $499,999.99
3.75% $500,000.00 to $999,999.99
3.50% Above $1,000,000.00

Miscellaneous Fees

$0.00 Bond Trade Fee
$0.00 Treasury Trade Fee
$0.00 CD Trade Fee
$0.00 IVR Trade Fee
$35.00 IRA Annual Fee
$0.00 IRA Closure FEe
$0.00 Forced Margin Sellout Fee
$30.00 Returned ACH Fee
$30.00 Returned Wire Fee
$50.00 Stock Certificate Processing Fee
$50.00 Stock Certificate Delivery Fee
$5.00 Paper Statement Fee
$2.00 Paper Confirmation Fee
$20.00 Domestic Wire Fee
$50.00 International Wire Fee

Broker Ratings

Overall
Commissions & Fees
Ease of Use
Research
Platforms & Tools
Customer Service
Mobile Trading
Offering of Investments
Education

Broker Awards

2014

Lightspeed Trading was awarded Best in Class for Commissions & Fees and Active Trading. Read the 2014 Online Broker Review.

2013

Lightspeed finished #1 for Active Trading and was rated 4.5 stars for Commissions & Fees. Read the 2013 Broker Review.

2012

Lightspeed was Best in Class for Commissions & Fees and Active Trading. Read the 2012 Broker Review.

Offering of Investments

Yes Stock Trading
Yes Options Trading
Mutual Funds
Yes Forex Trading
Yes Futures Trading
Yes OTCBB / Pink Sheets
DRIPs
Yes After Hours Trading
0 Commission Free ETFs
0 Retail Locations
0 Mutual Funds (Load)
0 Mutual Funds (No Load)
0 Mutual Funds (NTF)
0 Mutual Funds (Total)
6 Complex Options Max Legs
Apex Clearing Firm
Yes No Maintenance Fees
No Minimum Deposit
No Fee IRAs
Yes Broker Assisted Trades

Research

Mutual Funds Research
Yes Pink Sheets / OTCBB Research
Fixed Income Research
Global Market Overview
Equity Research - SEC Filings
ETF Research - Top 10 Holdings
ETF Research - 3rd Party Reports
Fund Research - Strategy Overview
Fund Research - 3rd Party Reports
Fund Research - Fees Breakdown
Fund Research - 3rd Party Ratings
Yes Screener - Stocks
Screener - ETFs
Screener - Funds
Screener - Options
Screener - Bonds

Banking

Checking Accounts
Savings Accounts
Credit Cards
Debit Cards
Mortgage Loans
Retail Locations
No Fee Banking
Mobile Check Deposit
ATM Fee Reimbursement

Customer Service

Yes Phone Support
Yes Email Support
Live Chat (prospect clients)
Live Chat (current clients)
Yes 24/7 Support

Recommended For

Yes Best in Class Commissions & Fees
Best in Class Platforms & Tools
Best in Class Research
Best in Class Customer Service
Best in Class Ease of Use
Best in Class Investor Education
Best in Class Mobile Trading
Yes Best in Class Active Trading
Best in Class Options Trading
Best in Class New Investors

Mobile Trading

iPhone App
iPad App
Android App
Mobile Site

Platforms & Tools

Yes Virtual Trading
Yes Web Platform
Yes Desktop Platform
Mac Platform
Yes Platform Backtesting
Yes Trade Hot Keys
Yes Streaming Time & Sales
Yes Level 2 Quotes
Streaming CNBC TV
Yes Sitewide Real-time Quotes
Yes Watchlist Streaming Real-time Quotes
Yes Options - Chains Basic View
Yes Options - Chains Spreads View
Yes Options - Greeks Analysis

Active Trading

Internalizes Trades
Receives Payment for Order Flow
Yes Direct Routing (Stocks)
Yes Client Liquidity Rebates
5000 # of Easy to Borrow Stocks

Education

Investor Dictionary
Live Seminars
Yes Investor Community

Compare Lightspeed Trading:



All pricing data was obtained from a published web site as of 04/07/2014 and is believed to be accurate, but is not guaranteed. The StockBrokers.com staff is constantly working with its online broker representatives to obtain the latest pricing data. If you believe any data listed above is inaccurate, please contact us using the link at the top of this page. * For stock trade rates, advertised pricing is for a standard order size of 500 shares of stock priced at $30 per share. For options orders, an options regulatory fee per contract may apply.