About LightSpeed Trading
Lightspeed Trading LLC is an online stock and options broker specializing in day trading services. The company offers securities and
direct-access brokerage, trading, and advanced order routing to clients utilizing Lightspeed's
proprietary trading software. Founded in 2006, the company is headquartered in New York City and is privately held.
Since Lightspeed's focus is entirely on active, professional day traders, it offers a variety of trading platforms and software for individuals
as well as hedge funds and institutions. For the sake of fair comparisons, we will only look at features of interest to typical individual investors
who are managing their personal accounts and don't consider themselves professional day traders.
Lightspeed offers two plans for individuals. One is a standard trade-based commission of $4.50 for stocks and ETFs. The other is a share-based
commission of $0.0045 per share. However, the share-based commission is not offered on the company's Web Trader trading platform, the equities
trading platform recommended for individual investors. Options and futures are $0.60 per contract with a minimum charge of $4.50.
Is Lightspeed Legitimate?
Lightspeed is a member of the Financial Industry Regulatory Agency (FINRA), an independent, not-for-profit organization authorized by Congress to
protect America's investors by making sure the securities industry operates fairly and honestly. As a registered broker-dealer, the company is
governed by the Securities Exchange Commission (SEC) which regulates and polices the securities industry in America.
The company has won numerous industry awards. Most notable is a seven-consecutive-year streak of winning Barron's Best Broker for Frequent Traders
Award. The company has also won awards from Deloitte, Ernst & Young, and Crain's.
Is Lightspeed Safe and Insured?
Lightspeed is a member of the Securities Investor Protection Corporation (SIPC), which insures all accounts against the company going bankrupt
up to $500,000, of which a maximum of $250,000 applies to cash credit balances. Also, Wedbush Securities, the company's asset management and
clearinghouse, provides an additional $25,000,000 of insurance per account up to an aggregate loss limit of $100,000,000. The extra insurance
covers an additional $900,000 of cash. Neither form of insurance covers a decline in a customer's asset value due to market loss.
The company also offer 2-step verification for online accounts, which adds an extra layer of protection to account settings and fund transfers.
Lightspeed Competitors
Is Lightspeed a Scam?
Lightspeed Trading is clearly not a scam. It is a legitimate broker-dealer serving individuals and institutions with an emphasis on high-volume,
high-frequency trading. However, Lightspeed has a myriad of pricing structures, trading platforms, and commission schedules.
Some of the fine print on its website discloses price breaks for certain levels of activities and minimum commissions when trading from certain
of the company's trading platforms. All this extra information makes it difficult to assess Lightspeed's competitiveness with other online
brokerages. Commissions for super-active traders certainly appear to be attractive, but when the monthly activity falls even a few shares or a
few trades below a threshold, a trader may be in for a rude shock when the commission statement arrives.
Also buried deep in the fine print are the associated fees for servicing accounts and maintaining trading platforms. For example, Lightspeed
charges $20 to open an IRA and $95 to close that account. Annual IRA fees are $35, but that fee is waived the first year. Mailing fees for
paper statements and confirmations are $5 and $2, respectively. Emailing those documents is free.
Lightspeed has a large list of routing fees that may or may not be assessed on a given trade and would take extra time to research and understand
so a trader would make a routing decision that was in his or her best interest. Account minimums are also high compared to most online brokers.
The trading platform most likely to be used by individuals, Web Trader, requires a minimum initial investment for new accounts of $10,000. Most
online brokers require from $0-2500 to open an account.
Amenities that individual traders might desire, such as Streaming Level II quotes, are not available on the basic Web Trader platform. Also,
options traders must use a separate trading platform called Livevol X. This means that traders cannot easily switch from stock trades to options
trades like they can when using other trading platforms with other online brokerages.
LightSpeed Trading Reviews
Although not accredited by the BBB (which is not uncommon, nor is it necessarily a negative), Lightspeed has earned a B- rating from the consumer
watchdog organization. In the past three years, only one complaint against the company was closed with the BBB. It dealt with a Billing/Collection
issue. No customers have filed reviews of Lightspeed Trading. In addition, the BBB knows of no government action involving the marketplace conduct
of Lightspeed Trading LLC and has nothing to report concerning Lightspeed's advertising at this time.
LightSpeed Trading Review Recap
While not a scam, Lightspeed Trading is certainly not for everyone. Only the most sophisticated investors, those with large accounts who trade
frequently and who understand and can make good use of features like specific order routing or large commission discounts for high-volume trading,
should consider Lightspeed trading.
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