Lightspeed Review 2024

Our Take

Do not let the fact that Lightspeed scores in the bottom half of our broker reviews fool you. We measured Lightspeed along with some of the industry’s largest full-service brokers, with broad product offerings and access to available banking services. Simply put, this is not a league that Lightspeed pretends to be in. Instead, Lightspeed is built for active day traders, and that is where it excels.   

Company Overview

Lightspeed is headquartered in Morristown, New Jersey, and has its roots in the proprietary day trading community. This demographic comprises companies with large bank accounts that sponsor a dozen or more traders to leverage their money into margin trades with short duration (usually minutes or seconds), using hundreds or thousands of shares. Over the years, Lightspeed’s platforms have greatly increased in functionality and usability, but its pricing, policies, and power features have remained rooted in the niche market of active day traders. Lightspeed's commitment to meeting the needs of these traders ranges from its inception as a spinoff of E*TRADE in 2006 to its inclusion of cryptocurrency assets through the acquisition of Coinigy in 2021. The focus has led it to success over the years with its customer base.

Pros & Cons

Pros Explained

• Highly customizable platforms: Each of Lightspeed's platforms is customizable for the needs of highly active traders. The downloadable platform is exceptionally well-featured for rapid order entry, no matter how sophisticated the order. 
• Excellent pricing for high-volume traders: Lightspeed is one of the few brokers with a tiered pricing structure. The theory goes that what you pay for in commissions, you make up for in speed of execution. That said, the commissions are comparatively low anyway.
• Supports trading in equities, options, futures, and cryptocurrencies: Active day traders want to be where the action is so they can capture price volatility and its benefits. Lightspeed offers Level I and Level II data and all of its customizable features for use with each of its asset types: stocks, options, futures, and cryptocurrencies. 
• Sophisticated routing algorithms: In addition to getting a noticeably higher speed of execution than seen on most competitors' platforms, Lightspeed traders can carefully choose to route their order to maximize the benefits of providing liquidity (and earning a rebate) instead of taking liquidity out of the market. Such a strategy requires careful planning and observation, but astute traders who can benefit from these routing options are diehard Lightspeed users for life.

Cons Explained

• Not suitable for buy-and-hold investors: For the typical buy-and-hold investor, using Lightspeed’s high-power platform is an unnecessary luxury. It’s a bit like driving a Formula 1 car to a workplace parking lot. The time a typical investor would spend to use the platform won’t add to the quality of their returns. Most investors are turned away because of this. 
• Comparatively high costs for casual traders: The best pricing on the Lightspeed platform comes from trading large numbers of shares or contracts. For example, in accounts under $15,000 (the minimum balance for opening a Lightspeed account is $10,000), a minimum commission cost of $25/month can be eliminated if a trader makes trades that total more than $25 in commissions. However, the casual trader who only makes one trade a month may effectively be paying a commission of $25 for a single round-trip trade. 
• Significant learning curve for beginners: Even aspiring active traders will find that they need to learn the basics of the downloadable Lightspeed trading platform before making much headway. This learning comes quickly for some traders, but not for all. Beginning traders especially have to dedicate time to learning the complexity of this platform.

Usability

Experienced and active traders will find that Lightspeed’s platforms are not difficult to learn, manipulate, or use. Even beginning traders will find it easy to go through the process of opening an account online. However, once the user has navigated the screens to create a username (a simple email will do), set a password, and specify the account type (individual, joint, LLC, corporate, partnership, traditional, or Roth IRA), the work of learning the platform creates a separation.  

Those determined to mine the value of the platform will work through the series of questions to determine professional or non-professional status without a pause. Casual traders will get the sense that something more daunting is on the way, and it won’t be long before they are faced with the choice to put in the time to learn this new tool or seek it elsewhere. 

Lightspeed’s web-based and mobile trader platforms offer more streamlined functionality than the downloadable version, making the interface more suitable for occasional traders. However, the two specialty platforms, Sterling VolTrader and Eze EMS, leave such traders behind as they offer specific tools for helping those who want to scalp options and futures contracts, respectively. It is worth noting that Lightspeed's mobile app is available for both Android and iOS. The app's comparatively narrow feature set makes it more of a complement to the desktop platform, as it seems to be intended for closing trades that may have been opened elsewhere. 

The app supports the same asset classes as the desktop and web platforms. You'll find streaming data available, but you can't stream data on multiple devices at the same time and it doesn't offer news, research, or drawing tools. Also, some of the interesting sophisticated order types beyond market and limit orders are not available on the mobile platform.

Trading Experience

Lightspeed's flagship platform, Lightspeed Trader, is a downloadable app designed for active traders, hedge funds, and institutions. The direct market access gives it a powerful execution capability that will be lost on newbie traders. It can be configured so a trader’s favorite tools, hotkeys, and widgets are easily available. The layout can easily be set up to switch between asset classes, time frames, conditional order sets, or chart and indicator groupings. Tools like this help a trader move as fast as their hand-eye coordination will allow.

Traders can trade equities and options on any Lightspeed platform but will need the Eze EMS application to trade futures. Options traders might prefer the Sterling VolTrader application geared toward monitoring risk using Greeks. Crypto trading is done through Coinigy, a wholly-owned subsidiary of Lightspeed. All platforms offer streaming real-time data, but only on one device at a time. 

Level I and II quotes are available on all platforms except web and mobile. You can enter multiple orders simultaneously on Lightspeed Trader, Sterling VolTrader, and Eze EMS. Eze EMS even lets you stage orders for later entry. 

Mobile Trade Experience

In October 2023, the company announced that it had purchased the assets of Optionality, including Optionality’s mobile trading app. The acquisition introduced streamlined trading of option spreads generated by the Optionality app, all while giving users the ability to build their own option trades with a custom spread builder tool.

The mobile trading platform offers most of the same functionality as Lightspeed web, but not all. 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. It is well suited for exiting trades and orders on the go when a trader can’t get back to their desk.

Range of Offerings

Lightspeed traders focus their activity wherever the action is. The platform allows a trader to work with a wide variety of assets, including:

• Long stock and exchange-traded fund (ETF) trades
• Short stock and selected ETF trades (about 6,500 tickers are on the easy-to-borrow list for short sales) 
• Over-the-counter (OTC) stocks
• Futures contracts
• Options on futures
• Simple and multi-leg options (up to four legs)
• T-bills (via a live broker)
• Cryptocurrency

While Lightspeed has not joined many competitors in supporting the trading of fractional shares, the company has added a second locate source into its Lightspeed Trader and Sterling Trader Pro platforms for traders who deploy short-selling. In addition, in October 2023, Lightspeed introduced a professional API connection for trading automation.

Order Types

Market and limit orders are available on all Lightspeed platforms. Beyond that, the order types vary from one platform to another. The downloadable platform allows for an impressive list of order types in addition to market and limit orders, including: 

• Smart
• Super smart
• Add only
• ARCA primary peg
• Electronic communication network (ECN) 
• Limit on open
• Limit on close
• LOO imbalance
• LOC imbalance
• Market on open
• Market on close
• Non-routable
• NSDQ primary peg
• Midpoint peg
• DARK
• FANA

In addition, custom orders are available that include all of those previously listed along with relevant parameters. These customer orders can then be programmed to work with hotkeys for rapid execution.

Trading Technology

Lightspeed’s sophisticated routing technology allows traders to specify many different venues, including several dark pools, through which they can direct their orders. Fees for the routing choice may increase or decrease the cost of a trader’s commission. 

Traders can select Lightspeed's smart order router, "LSPT route," which uses a proprietary algorithm designed to provide both the best execution and price improvement. Overall, traders have come to expect exceptionally fast order executions from Lightspeed, but how effective this execution is remains difficult to measure. That’s because Lightspeed doesn't publish benchmarks or track price improvement for typical orders. 

Previously the platforms didn't support any backtesting or trade automation capabilities. However, since the Lightspeed API was made available late in 2023, techno-savvy users may be able to generate these capabilities themselves.

Costs

As of March 1, 2024, Lightspeed reduced the rates on its tiered commission schedule—which gets better based on trading volume. Per-share rates now range from $0.0010 to $0.0035, and per-trade rates fall between $2 and $3.99. Both of these ranges depend on how much a trader trades during the month.

On the surface, the cost structure may sound straightforward, but the variety of platforms and routing alternatives make it a bit complex. Active traders overcome this by simply trading heavily and observing that the monthly cost works out well. But for the casual trader, the many trading exceptions become a snare. 

For example, traders who don't qualify for the active trader commission group can trade stocks and ETFs for $0.0035 per share with a $0.25 minimum, or $3.99 per trade. Options are $0.50 per contract with a $1 minimum, and futures cost $1.29 per side plus exchange fees. New traders should be aware that there can be several additional fees, exceptions, or both. Consider the following sampling and note that these costs may be in addition to the standard per-share and per-contract commission rates: 

• The OTC commission is $10 per transaction with no share cap.
• Margin interest on a $0 to $49,000 balance is 12.25%, and it's 10.00% at $1 million.
• Accounts that fall below a $15,000 balance must generate $25 per month in commissions or pay the difference.
• The software access fee for Lightspeed Trader is $130 per month. It can be reduced or waived based on trading activity.

Additional fees may also include:

• The market data package includes news and streaming headlines and costs $11.50 per month.
• Routing fees or rebates vary depending on the trader’s choice and the number of shares or contracts they trade. 
• The ACAT out fee is $95.
• The exercise and assignment fee for options contract is $15.
• Wire fees are $20 for domestic and $50 for international.
• The IRA opening fee is $20, and the IRA annual fee is $35 after the first year.
• Live broker trading is available for an additional $20 per transaction.
• A paper statement is $5.
• A paper confirmation is $2.
• Withdrawal checks are free except for overnight or Saturday delivery, which cost $30 each.

Lightspeed also offers a promotional rebate mechanism for gaining back 50% of commission costs for the first three months. 

How This Broker Makes Money From You and For You

Lightspeed charges a variety of commissions and fees (such as those mentioned above), and that is how it makes money from its traders. It also makes money from its algorithmic routing practices, though by giving the trader a choice at routing, it may actually help the trader make money by guiding them on how to provide liquidity to the market. In addition, the platform provides noticeably fast and solid execution, often with price improvement. The more active a trader is, the more likely they will be to notice the benefits of working with Lightspeed.

Account and Research Amenities

The Lightspeed Trader platform has a lot of information and customization available. It can allow the trader to perform particularly useful analysis from watching the Level 1 and 2 streaming price data. However, outside this hub of information, there is considerably less available than with other major brokers.

Stock Screener

Lightscan is a screener available through the Lightspeed Trader platform, but only made available if a trader requests it via an email to customer service. It has limited selection criteria, including net change, percentage change, price range, and volume.

Other Screeners

No ETF or mutual funds screener tools are offered on the platform, and neither are there screening tools available for options, fixed income, or crypto assets.

Tools and Calculators

Lightspeed has several trading tools to help you identify active and potentially mispriced options and equities. One such is called Vertigo, which identifies activity based on trading imbalance parameters such as puts/calls and buys/sells. 

Charting

Charts stream in real time with many options for customization. These charts and indicator tools are serviceable, but do not exceed the functionality a trader can find with other brokers.

Trading Idea Generators and Third-Party Research

Lightspeed partners with several third-party vendors to provide a unique and powerful toolset. Vendors include:

• Trendspider
• Tradervue
• Wingman Tracker
• Tipranks
• Context Analytics
• Esignal

News

Streaming professional news and headlines are included in the basic market data package. This is available at a fee of $11.50 per month for non-professionals.

Missing Tools

Some of the tools not available on Lightspeed’s platforms that often show up in other brokers' offerings include:

• Cash management
• Fractional dividend reinvestment plan (DRIP)
• Fractional shares
• SIG/ESG research and investment selections

Portfolio Analysis

Active traders have a different kind of need for portfolio analysis than the typical investor. The platform provides performance reports that track profit and loss by the underlying symbol for both equity and options trades. It also includes Lightspeed Risk, a tool that lets traders monitor profit, loss, halted trading symbols, and real-time trading activity. Traders can view risk estimates by symbol, strategy, or portfolio in a tabular or graphical format.

Education

Education resources at Lightspeed are limited compared to other brokers. The company provides video tutorials, maintains a YouTube channel and a blog, and offers one or two live webinars a month on a variety of services. It also partners with third-party tools and content providers to provide educational resources on occasion.

Customer Service

Lightspeed has yet to adopt the popular live chat feature that can be found on many of its competitors’ platforms, but assistance can be found Monday through Friday during market hours via phone and email.

Security and Reliability

Excess Securities Investor Protection Corporation (SIPC) coverage is provided by Wedbush in place of Lightspeed. The policy covers all Lightspeed accounts for up to $25,500,000. To further protect the users of Lightspeed, Wedbush has purchased a supplemental SIPC bond that provides up to $25,000,000 in cash and securities. 

However, there is a $100,000,000 aggregate loss limit. 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.

Two-factor authentication is available for Lightspeed Trader, though the biometric entry for the mobile app isn't available. The company has reported no recent platform outages and no significant breaches. 

Transparency

Though Lightspeed's website clearly states details about commissions, leverage, and margin trading, there are many combinations that it cannot adequately document in a simplified manner. High-volume traders must contact Lightspeed to determine the discounted rate for which they qualify. 

The company’s stellar track record does carry this blemish from 2021: the Securities and Exchange Commission (SEC) found it guilty of securities fraud. The charge was for misleading customers about the services it was providing because the company stated it would allow users to select routing. In fact, in a few cases that routing didn’t happen as directed, and the deviation allowed Lightspeed to profit. Lightspeed was fined a net total of $100,000 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
  

The Bottom Line

Lightspeed is a great fit for active day traders who work with high volumes of equity shares, options, and futures contracts. Even though the broker still charges commissions, the rapid execution experienced by their customers proves valuable to them because they keep coming back for more. 

The platform’s custom orders, customizable screen layouts, and programmable hotkeys make for a trading experience as effective and fast as any out there. Lightspeed’s broker review score is hampered by its limited focus on a niche of active day traders. However, the higher account minimums, high prices for casual traders, and lack of easy-to-adopt tools for the typical investor have not inhibited Lightspeed’s growth. The platform is still highly popular within its niche.

Compare Lightspeed to Similar Brokers

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