I gave Lightspeed Trading a test-drive to see how it performs. Here's what I found.
In case you're unfamiliar with the term, “low-latency” refers to stock-trading technology that reacts faster to market events than your run-of-the-mill broker. Low-latency platforms use sophisticated algorithms to do this, and it increases the potential profitability of your trades.
Lightspeed is a platform designed for ultra-low-latency stock trades (hence its name). While some brokers focus on the fancy bells and whistles, Lightspeed is all about giving traders access to rapid-fire trade abilities at a low cost.
Lightspeed Trading Features
|Investment Types||Stocks, OTC/Penny Stocks, ETFs, Mutual Funds, Bonds, Options, Forex, Cryptocurrencies, Futures|
|Broker Assisted Trade||N/A|
|Customer Service||Phone: 24/7; Email|
What Is Lightspeed Trading?
Lightspeed Trading is a discount broker that serves both institutional investors and retail investors like you and me. This means regular investors can get access to some of the same powerful tools that hedge fund managers use to manage their massive portfolios.
The Lightspeed platform comes in five different varieties: LS Trader, Sterling, Livevol X, RealTick Pro and Web/Mobile Trader. The first four platforms are designed for professional traders, so we are going to focus on the web and mobile trading platform designed for retail investors like us. But if you do happen to run an investment fund with tens of millions of dollars, be aware that Lightspeed can handle your needs as well.
Lightspeed Trading Screenshots
How Does Lightspeed Trading Work?
Overall, Lightspeed offers trades for equities (stocks), options and futures. The web and mobile platforms for retail investors do not include futures trading access. I should note that Lightspeed is limited, compared with full-scale brokerage firms such as E*TRADE and TD Ameritrade, which also offer bonds, mutual funds and other investments.
The Web/Mobile Trader platform gives you access to the following features:
- Web-based and mobile trading
- Streaming stock quotes
- Equity and options trading
- Watch lists
- After-hours trading
- Customizable charts
- Market scanners
The Web/Mobile Trader platform is free to use and charges no monthly software fees. Retail investors do not pay for market data at Lightspeed. Some institutional investors do pay for it.
Lightspeed is clearly designed for the most active investors, alongside institutional investors. If you are a passive investor with a relatively small portfolio, you are likely better off with a major discount brokerage. (Here are others that we've reviewed at Investor Junkie.)
However, if you are a serious, active investor, Lightspeed Trading is just right for you.
|Options Trades||$0/trade + $0.65/contract ($0.50/contract for 30+ trades/quarter)||$0||0.20|
Getting Started With Lightspeed Trading
To open a new account, new customers must fund an account with a minimum balance of $10,000. This eliminates beginner and low-level investors. You can fund your account with a bank wire, ACH or check. If you fund your account by ACH or check, funds are subject to a five-business-day hold. Accounts funded by wire transfer can typically begin trading 24 hours after funding a new account.
To get the full power of Lightspeed, it's best to download and install a desktop version of the trading platform. I tested the Mac version, though versions are also available for 32-bit and 64-bit Windows machines. Downloading and installing took me about two minutes on my fast internet and Macbook Pro laptop.
Logging into the platform with a new demo account, I was greeted with a populated trading platform interface, which looked familiar and comfortable to me. (I've used several desktop trading software packages and a Bloomberg terminal.) I could quickly see stock prices and market data from the home screen.
I like the focus on “Hot Buttons” in the center of the screen, which give you an ability to quickly buy or sell a round lot of 100 shares of stock at market rates or close out options orders in a click. Equity and ETF trades are routed through the NYSE ARCA Exchange, the first all-electronic exchange in the U.S., with more than 8,000 available securities to trade.
Beyond the hot buttons, you can also quickly enter trades of any stock or option, with live updates on market prices and bid/ask spreads. The loaded security in the trade tool automatically updates the option spreads and charts at the bottom of the window. With one click, you can update charts to show a 90-day view, 52-week view, one-hour view or five-minute view.
Layouts can be customized to your needs, and predefined default layouts are available to fit various screen resolutions.
You can access summaries of your accounts and more from the Windows style menus at the top of the app, or click around to manage your account and positions and enter trades.
The platform clearly is designed for active traders looking to enter and manage their accounts securely as quickly as possible. When you log in, you are connected via SSL, an industry-standard encryption method, and your trades are routed through low-latency systems right to the exchanges to lock in market prices at near-instant speeds.
Lightspeed Trading Pricing
Because Lightspeed was designed for institutional investors first, it has a unique pricing model compared to many retail brokers. Equities trade commissions are per share and per trade. There are five price levels, depending on how many shares you buy. The more you buy, the more you save per-share. Per-share trade discounts start at 250,000 shares traded per month, and per-trade discounts start at 250 trades per month. Most individuals won’t come near that and will pay $0.0045 per share traded, with a $1 minimum per trade, plus a $4.50 per trade fee. To receive the discounts, you will need to contact Lightspeed and request them.
For up to 250 shares, you will pay $4.50 per trade. The $0.0045 per share kicks in for practical purposes once you reach the $1 minimum. If you want to trade 500 shares of a company, you would pay $2.25 in share fees plus $4 for the trade, or a total of $6.25. That seems fair but is more than you would pay at select online brokers.
For options, traders pay $0.60 per contract up to 500 contracts per month. Discounts kick in starting at 500 contracts per month for higher-volume traders. There are also service and processing fees, which you can view here.
This pricing model is a bit more complex than you find at major brokers like Schwab and TD Ameritrade, and way more than the $0 you pay at Robinhood. However, for a very high-volume investor, the fees drop dramatically as you scale up in volume.
Lightspeed Trading Pros & Cons[table “proscons” not found /]
Lightspeed Trading isn’t built for passive investors looking to slowly build a portfolio over a long period of time. Instead, it's optimized for the most active traders looking to score quick profits in the stock and options markets.
While it does not have a full suite of investment options that you might find at large discount brokers, it does offer specialized trading software perfect for active investors and those with very large portfolios.
In summary, if you are an experienced, active trader, Lightspeed may be perfect for you. If you are a beginner or passive investor, however, you’ll do better elsewhere.