Lightspeed Review: Excellent Order Processing

Many online brokers have tried to attract small investors by expanding their services, but Lightspeed and a few others have stayed focused on their niches. This broker only works with a small number of asset classes, like stocks, options, and futures. This makes it clear right away who Lightspeed is for. Broker is best for high-volume, active traders who can take advantage of the tiered pricing and can pay between $10,000 and $25,000 to get started. This article will give you more information about Lightspeed so you can decide if it’s the right company for you.

Overview : Website

Account minimum: $10,000 for Web Trader platform

Account fees: $25 minimum monthly commission fee for accounts under $15,000.

Tradable securities: Stocks, ETFs, Options, and Futures

Trading platform:

• Lightspeed Trader for active traders, hedge funds and institutions. $130 monthly platform fee.
• Lightspeed Web/Mobile Trader for occasional day traders. $0 platform fee; market/data feeds free for nonprofessional traders.
• Futures trading on Eze EMS platform.

Customer support options: Phone and email support 8 a.m. – 5 p.m. Eastern. Urgent trade desk: 4 a.m. – 8 p.m. Eastern.

Lightspeed serves active day traders, professional traders, trading groups, institutions, and hedge funds that are interested in the stock, options, and futures markets. The company offers several trading platforms, such as the flagship Lightspeed Trader, Lightspeed Web & Mobile, and Sterling Trader Pro, a full-featured Level II trading platform with advanced charting. Lightspeed’s other platforms are Sterling VolTrader, formerly LiveVolX, an advanced options trading platform, and Eze EMS, formerly ReaflTick, a futures trading platform.

The foundation of Lightspeed’s services is a solid platform with outstanding order execution. The industry-wide drive for zero-commission trading hampered Lightspeed’s retail development, but company leaders assert that their core clients and target market recognize the value and advantages of the active day trading services and technology they offer. We’ll look more closely at Lightspeed to help you decide if it’s a good investment for you. 

Customer Service

• General phone support is available from 7:00 a.m. to 6:00 p.m. Eastern time. The trading desk is open from 4:00 a.m. to 8:00 p.m. Eastern time.
• Live brokers are available during trading hours.
• No online chat
• No chatbot
• According to Lightspeed, phone calls are answered right away in most cases.

Products

The Lightspeed platform is designed for active traders and focuses on stocks, options, and futures (you need a separate account to trade futures). The company doesn’t offer commission-free ETFs, forex, or mutual funds, and the only fixed-income options are T-bills traded through a live broker. There are no fractional shares. Traders who use Lightspeed can do the following:

• Stocks long and short (about 6,000 on the easy-to-borrow list for short sales) 
• OTCBB
• Futures/Commodities
• Futures options 
• Simple and multi-leg options (up to four legs)
• T-bills (via a live broker)
• Cryptocurrency

Pricing

Lightspeed provides various compensation structures based on trading volume. If you meet certain monthly trading volume thresholds, you may be eligible for commission discounts through Active Trader Commission Group (you must contact the company to join the program and determine the rate for which you qualify). Per-share fees range from $0.0010 to $0.0045, according to monthly volume, while per-trade fees range from $2.50 to $4.50, also based on monthly trading volume. Options are similarly hierarchical (the rates are below).

Traders who don’t qualify for the Active Trader Commission Group can buy and sell stocks and ETFs for $0.0045 per share (with a $1.00 minimum) or $4.50 per trade. Options are $0.60 per contract ($1 minimum), and futures pay $1.29 per side (plus exchange fees).

The costs below are based on the standard commission rates per share and per contract for Lightspeed Trader and Lightspeed Web Trader.

• The cost of a trade one share is $1.00. The cost to trade 1,000 shares is $4.50
• Options per contract fee are $0.60 with a minimum of $1.00 per transaction OTCBB commission is $10.00 per transaction with no share cap
• The cost is $30 for 50 contracts.
• Cover call trade of 500 shares plus five contracts is $5.25
• Margin interest at $0-$50,000 balance is 9.75% and 7.25% at $1,000,0001
• Crypto is now available through Lightspeed Crypto with no transaction fees
• Exercise and assignment fee: $20.00 
• No deposit or withdrawal fee
• Wire fees: $20.00 domestic, $50.00 international
• IRA opening fee: $20.00. IRA annual fee: $35.00 
• The price per futures contract open and close is $0.60 per contract, per side 
• No ETFs trade commission-free 
• Live broker trading is available for an additional $20.00 per transaction
• Paper statement fee: $5.00
• Paper confirmation fee: $2.00

Available Account Types

Lightspeed has all of the most common account types, such as:

• Individual and joint taxable trading accounts
• Traditional individual retirement accounts (IRAs)
• Roth IRAs
• SEP IRAs have simplified employee pension plans.
• Corporate trading accounts
• Accounts on trust
• Accounts for limited liability companies (LLCs) are more for businesses than for people.

Order Types

All Lightspeed platforms enable trailing stops and stop limit orders. The Eze EMS platform (previously RealTick) supports one-cancels-the-other (OCO) and bracket orders, whereas Lightspeed Trader allows you to enter “if touched” orders. Only market and limit orders can be placed on the web and mobile platforms, which is a small number of order types. 

You can enter orders simultaneously on Lightspeed Trader, Sterling Trader Pro, and Eze EMS, as well as stage orders for later entry on Eze EMS. It is not possible to choose a tax lot prior to placing a trade; closed positions default to first-in, first-out (FIFO).

Usability

The Lightspeed website is simple and straightforward to navigate, and online account creation is simple. During the account opening procedure, you create a username (usually your email address) and password, select the trading platform you intend to use, and choose the proper account type (individual, joint, LLC, corporate, partnership, or IRA). The SIPC coverage offered by Lightspeed Financial Services Group LLC is limited to securities and cash held in connection with the purchase or sale of securities in equity and equity options accounts.

Lightspeed Trader is the company’s downloadable (and flagship) trading platform. It enables rapid market access and may be adjusted to show your chosen tools and widgets first. Lightspeed Web/Mobile Trader is easier to use for infrequent traders. Sterling VolTrader evaluates and trades options. Eze EMS (previously RealTick) traders.

Lightspeed’s mobile app is accessible for both iOS and Android, however, it is less robust than other trading apps on the market. Its primary purpose is to close trades. The application supports the same types of assets as desktop and web platforms. You can locate streaming data, however, you cannot stream data simultaneously on several devices. Other restrictions include the absence of news, research, and drawing tools, as well as the ability to place just limit and market orders.

Trade Experience

The mobile trading platform provides the majority of the same capabilities as Lightspeed Web. It provides real-time streaming statistics and account information, but lacks the sophisticated analytics found in the downloaded platform. On the mobile app, you can trade equities and options, but not futures.

Security and Transparency

• Lightspeed Trader has support for two-factor authentication.
• There is no biometric login option for the mobile application.
• Lloyd’s of London provides excess Securities Investor Protection Corporation (SIPC) coverage for up to $25.5 million in cash and securities per customer account, subject to a $100 million aggregate loss maximum. The SIPC coverage offered by Lightspeed Financial Services Group LLC is limited to securities and cash held in connection with the purchase or sale of securities in equity and equity options accounts.
• The company has not recently reported any platform downtime.
• The company reported no breaches of significance.

Commissions, leverage, and margin trading are described in full on the Lightspeed website. High-volume traders must contact Lightspeed to learn if they qualify for a lower fee.

The Securities and Exchange Commission (SEC) found Lightspeed guilty of securities fraud in the beginning of 2021 for misleading consumers and profiting from lower “market center fees” provided by its affiliate when executing trades.

SEC documents: “Lightspeed assured its clients they could transmit orders to their preferred trading venues and be charged the market center costs it paid to execute them. Lightspeed disregarded many client orders and forwarded them to an associated broker-dealer (the “Routing Broker”), who frequently charged Lightspeed no or minimal market center fees. Lightspeed never notified its consumers about the Routing Broker or it followed their requests. Lightspeed charged its consumers for the market centers they picked, even though it paid less or nothing for those locations.”

Lightspeed was fined by the SEC for the violation.

News and Education

Customers get access to a streaming professional news feed as part of the basic market data subscription ($13 per month for non-professionals to receive quotations and news). The headlines are derived from various news sources.

Lightspeed is not a good resource for basic trading education. In addition, there is a decent glossary, FAQs, product tutorials, the Active Trader blog, and numerous instructive articles on trading fundamentals, options, etc. You’ll discover futures contract details under the Resources menu. The organization offers one to two live webinars per month, as well as recorded trading instructions and videos.

Pros and Cons

Pros Clarified

• Depending on your preferred trading instruments and features, Lightspeed provides numerous trading platforms (Lightspeed Trader, Sterling VolTrader, Eze EMS, and Web & Mobile) to select from.
• If monthly trading volume criteria are reached, the price of the Active Trader Commission Group can be as low as $0.001 per share and $2.50 per trade on stocks, $0.20 per options contract, and $1.29 per contract/per side for futures trading.
• The order of routers at Lightspeed is incredibly quick. It employs a unique algorithm designed to achieve optimal execution by cycling through various exchanges and routes.

Cons Clarified

• Initial account financing requirements for Lightspeed Trader are $25,000. Lightspeed WebTrader accounts have a $10,000 minimum unless you are a pattern day trader (PDT), in which case the minimum is $25,000.
• Traders who do not satisfy the volume requirement for discounted commissions pay higher fees: $0.0045 per share or $4.50 per trade for stock and ETF transactions, $0.60 per options contract, and $1.29 per contract/per side for futures.
• Accounts with a balance of less than $15,000 will incur a $25 monthly maintenance fee.
• Lightspeed is a less-than-ideal option for novice investors due to its high account minimums, high standard commissions, platform fees, and absence of “simple” features. In addition, the broker’s absence of bonds and mutual funds may deter casual clients seeking a diverse portfolio.

Is Lightspeed A Worth Broker to Get?

Lightspeed is suitable for high-volume traders of stocks, options, and futures. The company provides a selection of new trading tools, order types, and trading venues. Its flagship platform, Lightspeed Trader, is user-friendly and customizable, with sufficient hotkeys to free your hands from the mouse (and speed up your trades).

However, beyond the active trader population, Lightspeed’s applicability is limited. Due to the high buy-in requirements, high prices for casual traders, and absence of “simple” tools, Lightspeed is not suitable for novice or intermediate traders. Nevertheless, if you’ve outgrown your present trading platform and wish to advance your trading career, Lightspeed may be worth a deeper look. Even though Lightspeed’s overall star rating has gone down since last year’s study, this is likely because the company’s good offering is geared toward professional traders rather than the retail traders on whom our revised model focuses.

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Source: Investopedia