Lightspeed Trading Review
When it comes to day trading, Lightspeed Trading seems to be one of the best options you have. Deep discount commissions between $0.0045 and $0.0010 per traded share sounds good at first.
A look behind the curtain reveals that Lightspeed Trading has some disadvantages too, but they are only minor. I recently updated this Lightspeed Trading review. The old version focused on a comparison to all brokerage accounts.
But to make it short: Lightspeed Trading is not for investors, swing traders, and the standard retail trader. For that reason, the Lightspeed Trading review now focuses on the comparison to the leading day trading brokerages. Interactive Brokers sets the bar here.
But how does Lightspeed Trading compare to Interactive Brokers? And is it the best online broker for day trading?
The most important aspect is that Lightspeed Trading is not as cheap as it looks like. Also, there are monthly costs you have to consider when trading with them. This Lightspeed Trading Review reveals why Lightspeed Trading may not be the best option.
Day Trading with Lightspeed Trading
Lightspeed Trading customers are day traders and day traders need fast trade executions. Fast trade executions can make a whole difference regarding your trade performance. Since Lightspeed says that they provide "ultra-low latency," it seems that you are at the right place.
But how do you measure "ultra-low latency"? Lightspeed Trading, which is a division of Lime Brokerage, doesn't answer that question on their site. We don't know how fast this is compared to their competitors. I assume that they are at least as fast as their main competitors.
Where Lightspeed Trading shines is the customization part. Later in this Lightspeed Trading review, I will talk about their trading platforms. One thing can be said in advance.
You have tons of customization options when trading with Lightspeed trading platforms. Custom order routing, configurable buttons, and hotkeys can be configured.
Anyway, this is a minimum I expect from any day trading brokerage. Like the Interactive Brokers Review shows , both companies shine in this part and offer tons of routing options.
This is a part where Lightspeed Trading lacks. In March 2019 they announced that Lightspeed now offers the Lime Trading Gateway. The gateway is for automated and algorithmic traders.
IMO this solution is only for traders who understand how to develop an external trading system. Institutions and hedge funds have the human resources and financial resources to develop such a solution. But Lightspeed's trade automation API is not at all for retail traders or beginners. This was different at the beginning. Some years ago, Lightspeed Trading was compatible with Trade Ideas.
Traders were able to execute Trade Ideas strategies automatically via the Lightspeed Trading API. But things changed. Lightspeed Trading stopped to support this feature. But there is good news for any trade automation enthusiasts. Trade Ideas is now compatible with Interactive Brokers, the best day trading brokerage in the world.
Lightspeed Trading isn't compatible anymore, and I don't know of any big trading platform that you can attach to Lightspeed Trading. This is a disadvantage because trade automation is the future.
For me, it clearly shows that Lightspeed Trading does focus more on institutional investors. If you open an account with "just" $25,000 then you transferred just the minimum.
You Need $25,000
As I mentioned earlier, Lightspeed Trading is not for retail traders or investors. If you consider opening an account with them, then you need at least $25,000 to open an account. Yeah, I know they allow you to open an account with less capital too, but it doesn't make sense.
Actually, the Lightspeed Trading minimum deposit is only $10,000, but then you can only use their web trader. Day trading with less than $25,000 in your account is not possible. That's because of the pattern day trader rule invented by the SEC.
There are some pattern day trader rule workarounds too, but Lightspeed Trading isn't one of those workarounds. So, if you don't have that kind of trading capital, Lightspeed isn't going to be for you.
One important aspect is that your money at Lightspeed Trading is protected. The Securities Investor Protection Corporation covered is as high as $25,500,000 per account. https://www.sipc.org/
Based on my research on finra.org, Lightspeed Trading is not registered and regulated by FINRA, but their mother company Lime Brokerage LLC is.
Lightspeed Trading Platforms
Lightspeed Trading offers various trading software solutions and platforms.
There is the standard Lightspeed Trader, which can be used for stock trading. Over 100 routing destinations are available. It offers charting, level 2, advanced stock scanners, and news.
Monthly software fee: $130
Lightspeed Web/Mobile Trader
The Lightspeed Web/Mobile trader is web-based and comparable to Lightspeed Trader.
Monthly software fee: $0
For options traders, the Livevol X Options Trading platform is the best choice.
Monthly software fee: $0
Sterling Trader Pro is a full-featured Level II trading platform. It provides an advanced charting package and improved order entry options.
Monthly software fee: $230-$260
Eze EMS aka RealTick
The next platform is RealTick Pro as well as RealTick Express. This platform was created by Townsend Analytics, which is used by professional traders. It suited to active traders, as well as hedge funds.
Advanced order entry is available. And it's extraordinarily customizable, making it an excellent platform. But, it does come with a $325 monthly software fee, so keep that in mind.
Monthly software fee: $325
Lightspeed Gateway is a fully automated trading system, which allows you to trade your algorithmic systems via C++ or JAVA API and FIX. There are monthly costs of up to $325 for Lightspeeds trading platforms plus market data subscriptions. Do the math first!
Lightspeed Trading offers online stock trading, options, and futures trading in the United States.
Lighspeed Trading Account Types
Lightspeed Trading offers a variety of different accounts so suit individual requirements. For active traders, these are the following accounts types:
- Individual and Joint Accounts
- Corporate Accounts
- Joint Accounts
- LLC Accounts
- Trust Accounts
- Registered Hedge Funds Accounts
- IRA Accounts (Traditional, Roth, and SEPs - only for U.S. taxpayers)
Commissions and Fees
Lightspeed Trading offers some of the best day trading commissions you will find in the US. I know, there are more and more companies adversising with trading commissions as low as $0 per trade.
But don't get fooled. How do you think that they make money? As a day trader, you need a reliable broker, and Lightspeed Trading is a good choice.
Anyway, in my opinion, Lightspeed Trading doesn't care about retail traders with account sizes of $25,000. I assume their focus are institutional investors. More about this aspect in my Lighspeed Trading review summary.
Let's Get Back to the Lighspeed Trading Fees
The regular fee for stocks is $0.0045 per stock traded with a $1 minimum per trade. So it's more expensive than Interactive Brokers.
On top of that, you have to pay routing fees of up to $0.0035 per stock traded. So traders pay much more compared to Interactive Brokers but much less compared to TD Ameritrade.
The standard fee for options is $0.60 per contract, but if you trade more than 500 contracts per month, you can get lower rates. Those who trade more than 100,000 contracts per month will pay $0.20 per contract. But who does trade 100,000 contracts per month?
Futures trading is also possible with Lightspeed Trading, but you can only use their platforms Eze EMS aka RealTick or CQG. If you are a futures trader, then you are better served with a brokerage company specialized in futures trading.
There are some other commission options too. But those are not worth being mentioned. One thing you should be aware of is that data feed does cost extra, as it does with many professional brokers.
It can be anywhere from $10 up to $120 depending on your selection. And the type of data feeds that you are looking for.
When it comes to total costs, then you have to add the costs for:
- Platform Fee
- Routing Fees
- Inactivity Fees
- In-/Outbound Transfer Fees
I already pointed out that Lightspeed Trading is more expensive than Interactive Brokers. So the comparision Lighspeed Trading vs. Interactive brokers is beneficial for Interactive Brokers right now.
Education and Research
Since retail traders are not the target group, the education section is small. Currently, there are no new live webinars planned, and only four recordings are listed on their site.
Lighspeed Trading also has a YouTube channel. But the Lightspeed YouTube Channel has only 230 subscribers right now.
The Customer service at Lightspeed Trading can be reached via the phone number, email, webinars, tutorials, and service FAQs.
They are taking care of their clients at both the New York and Chicago offices. I think that we cannot expect to reach Lighspeed Trading 24 hours a day.
But based on their website, the support is available during regular market hours and extended market hours. I'd prefer to see a statement about the concrete support hours.
But Lighspeed Trading leaves us a bit in the dark here. Before you open an account, give them a call to find out if they are available at your preferred trading time.
Lightspeed Trading Review Summary
Lightspeed Trading is, without a doubt, a reliable brokerage. Robust technology exceptionally crafted for the high-volume and high-speed trading of today's markets makes Lightspeed one of the better day trading brokerages out there.
You can think of Lightspeed Trading like a Ferrari. It's a great car, it's an exotic car, and it's an extraordinarily fast car, but it should only be in the hands of the right person. It's not like a minivan that you take the kids to school in.
When we come back to the comparison Interactive Brokers vs. Lighspeed Trading, Interactive Brokers stays ahead in most points. Only the availability of more trading platforms at Lighspeed is a plus for Lightspeed Trading.
Anyway, since you can attach DAS Trader to Interactive Brokers, also this advantage is the comparison disappears. My conclusion: Day traders are better served with Interactive Brokers
Lightspeed Trading is an excellent choice for traders looking for a direct market access broker with numerous order transmission options and fast executions.
Related: Centerpoint Securities review