Lightspeed Review

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Feeling confused is a common experience for first-time visitors to the Lightspeed website, unless they can speak the lingo of Lightspeed's target market, the active trader.

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 such as TD Ameritrade, ETRADE, Scottrade, and Charles Schwab. At Lightspeed, it is not uncommon for customers to trade over 1,000 times a year.

Lightspeed has little to offer investors seeking retirement calculators, third-party reports, or stock education. But those who are looking for top-tier executions, low prices, and speed, will find themselves right at home.

Commissions & Fees

Through the main platform, Lightspeed Trader, two-tiered commission structures are offered: per share and per trade.

Because Lightspeed’s customers are active and hyperactive traders, the broker’s commission structure caters accordingly. Through the main platform, Lightspeed Trader, two-tiered commission structures are offered: per share and per trade. The more volume you trade or the more frequently you trade, respectively, each month, the lower your rate will be.

With per share trading, equity trades start at $.0045 per share plus/minus routing fees ($1 minimum). Traders who place larger orders, can opt to pay per trade, starting at $4.50, plus/minus routing fees. Options trades start at $.60 per contract and scale down in cost according to monthly volume.

An important aspect of Lightspeed’s business, one shared by only a select number of brokers, including its primary competitor Interactive Brokers, is that the broker passes all respective market center rebates (or fees) onto the customer, allowing seasoned traders to keep costs as low as possible.

By adding liquidity through using limit orders, customers receive the full market rebate, which typically averages around $.002 per share, depending on the market center. On the flip side, routing a market order to one of the major exchanges (i.e., taking liquidity) will run an additional charge of around $.003 per share, on average.

Platforms & Tools

Lightspeed offers customers multiple platforms to trade on. Under Lightspeed’s parent company, Professional Trading Solutions, three platforms are corporate owned: Lightspeed Trader, Lightspeed Web Trader, and Sterling Trader.

It is important to understand that Lightspeed Trader and Sterling Trader both charge a software fee of $100 monthly for access. This fee can be waived if at least $100 in commissions is spent during the month. For example, if you spend $60 in commissions, then the software fee is reduced to $40 for that month. Alternatively, Lightspeed Web Trader is free to use with no monthly software fee.

Third-party trading platforms focused on equities trading on offer to customers include RealTick Pro and Express. For options trading, there is Livevol X (owned by the CBOE; Lightspeed is the only broker with an enterprise license to offer the platform to customers), Derivix, Obsidian, OptionsCity, Valdi Options Solutions, and Wex. Lastly, for futures trading, customers can select from several options: RealTick, CQG, CunninghamTrading Systems (CTS), NinjaTrader, Patsystems, Quick Screen Trading (QST), RAN, and Trading Technologies (TT).

Overall, the Lightspeed Trader platform is designed for professional investors to trade efficiently and do their jobs without any delays.

For our review, we focused solely on Lightspeed's flagship platform, Lightspeed Trader, a desktop-based platform designed for speed, stability, and execution. While not the prettiest platform (it certainly would place last in any beauty pageant), the platform serves its purpose.

Although the learning curve is not too rough, 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 fed directly into the platform from the exchanges, showing that truly every millisecond matters to the broker and its customers.

Beyond placing lightning-fast trades, however, the platform has little to offer. I found the charting to be just okay, and the analytical tools were certainly lacking. If there is one stand out, it’s the Lightscan market scanner, which is built more for institutional traders than retail customers, despite the addition of 2017 column filtering by net change, % change, total volume, and similar. Even with Lightscan, though, users of industry-leading TD Ameritrade's thinkorswim platform or TradeStation will feel as if they are back in the Stone Age.

Furthermore, no research is offered beyond an integration of TipRanks, and the options trading functionality, which has improved over the years, still lacks the quality theoretical analysis tools (less basic P&L charts) its competitors offer.

Overall, the Lightspeed Trader platform is designed for professional investors to trade efficiently and do their jobs without any delays. In the world of hyperactive trading, every penny and second matters, and not having clean fills each time is unacceptable. Lightspeed understands who their customers are and cater accordingly.

One final note, for less active investors who are looking for something more basic (and less expensive), Lightspeed Web Trader (browser-based) is a good solution. Web Trader offers the same look and feel as Lightspeed Trader; however, the platform lacks advanced functionality such as hotkeys, level 2 quotes, basket order entry, direct market access, and there is no access to TipRanks research.

Mobile Trading

It is vital to understand that the Lightspeed Trading mobile app connects to Lightspeed Web Trader accounts, not flagship Lightspeed Trader platform accounts.

After multiple years of not offering any mobile apps for customers, in February 2017 Lightspeed finally released Lightspeed Trading, available for both iOS and Android.

First, it is vital to understand that the Lightspeed Trading mobile app connects to Lightspeed Web Trader accounts, not flagship Lightspeed Trader platform accounts. While access for Lightspeed Trader customers is due sometime in 2018, it's not here yet, which is a drawback for this segment of Lightspeed's customers.

Accessibility aside, the app focuses solely on the essential functionality required to trade. Customers will find basic watch lists with real-time streaming, simple quotes with charts, and order entry.  Rounding out the app includes portfolio P&L, positions, buying power status, and open orders.

While it's great to see Lightspeed finally enter the mobile arena and provide the basics to trade stocks, the app still needs plenty of enhancements if it wants to compete with industry leaders. In fact, during our testing, we struggled to even get quote data to stream through the app. Alongside increasing reliability and adding trading tools, priority for development is, no doubt, adding support for Lightspeed's primary customer base, Lightspeed Trader. See: Best Brokers for Mobile Trading.

Customer Service

To score Customer Service, StockBrokers.com partners with customer experience research group Confero to conduct phone tests from locations throughout the United States. For our 2018 Broker Review, 260 customer service tests were conducted over ten weeks. The data collected is institutional grade and sets the current industry benchmarks.

Results:

• Average Connection Time: <1 minute
• Average Net Promoter Score: 7.2 / 10
• Average Professionalism Score: 6.6 / 10
• Overall Score: 7.34 / 10
• Ranking: 10^th (13 brokers)
• View Infographic

Other Notes

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 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 of which are often used only by hedge funds. The broker also offers grey box trading in partnership with Trade Ideas, allowing customers to create and back-test their strategies, then use Lightspeed’s API to automatically trade them.

Final Thoughts

Lightspeed caters to active, professional, and institutional traders.

Lightspeed is not an online broker built with new or casual investors in mind. Instead, it caters to active, professional, and institutional traders alike, all looking for fast executions, competitive commissions, and dependable platforms built to serve one purpose: trading.

Methodology

For our 2018 Stock Broker Review we assessed, rated, and ranked 13 different online brokers over a period of six months. In total, we conducted 260 customer service tests, collected 3,796 data points, and produced over 40,000 words of research. How we test.

Reviewed by Blain Reinkensmeyer Blain heads research at StockBrokers.com and has been involved in the markets since placing his first stock trade back in 2001. He developed StockBrokers.com's annual review format seven years ago, a format broker executives consider the most thorough in the industry. Blain currently maintains funded accounts with more than a dozen different US-regulated online brokers and has executed thousands of trades throughout his career. He enjoys sharing his experiences through his personal blog, StockTrader.com.