Lightspeed vs. Interactive Brokers 2019

Interactive Brokers has revolutionized the trading game since industry disruptor Thomas Peterfly founded the brokerage in 1993. Built from the ground up as an electronic network and trade execution service, it wasn’t weighed down by traditional operating costs that included branch offices, wealth management services, and a paper-stuffed backroom. It used this advantage to offer ultra-low commissions and now generates the highest daily trading revenue of all U.S. brokers.

Lightspeed is a brokerage for the high-velocity stock and options trader. Account minimums are on the high side, but the cost of trading is very low. You won't find any planning tools or hand-holding for newbies here, but if you know what you're doing, you can make the most of the available trading tools.

In our 2019 Best Online Brokers Awards, Lightspeed received awards for Best for Low Costs, Best for Options Trading, and Best for Day Trading.

Interactive Brokers received awards for Best Overall Online Brokers, Best for Low Costs, Best for Options Trading, Best for Penny Stocks, Best for Day Trading, and Best for International Trading.

Lightspeed shines with an impressive roster of proprietary and third party trading platforms. However, account minimums and fees differ from platform to platform, limiting usefulness while adding confusion about final transaction costs. Third party providers manage the most advanced software, adding an administrative layer compared to IB’s standalone and web-based Trader Workstation, which hooks up to third parties through their highly-regarded API (application programming interface). 

Account holders of $25,000 or more can use the standalone Lightspeed Trader platform while $10,000 is required for bare-boned Web Trader. Both charge monthly fees offset by commissions, discouraging low turnover. Lightspeed Trader is full-featured, with integrated charting, complex options chains, advanced scanners and API capacity. Oddly, Web Trader includes the same limited feature set as their Mobile Trader app, with no Level 2 quotes, futures access or customizable order routing. 

Third party platforms include Sterling Trader, several versions of RealTick and Livevol X. All require $25,000 accounts, expect for Livevol’s $35,000 requirement. Sterling carries a non-refundable fee between $140 and $170 per month, unlike RealTick which offers rebates for trading volume. The broker also offers sophisticated risk management software for hedge funds as well as specialized futures and derivatives software.

IB has added features to Trader Workstation (TWS) continuously in the last two decades but the platform still confuses new and intermediate traders because it’s Java-based and doesn’t follow typical software conventions. However, the steep learning curve is worth the effort because execution is lightning-fast while more recent enhancements provide the majority of resources needed by retail and professional traders. 

TWS charting remains a weak link in the platform, with limited historical data and confusing customization features. It’s nearly impossible to build a chart template that won’t need to be changed weekly and many account holders just give up and use a third party technical analysis solution. Unfortunately, that can trigger additional frustration because the TWS API throttles the download speed of historical data, citing pacing and bar size limitations.

Lightspeed

• Customizable routing options
• Web-based platform offers plenty of tools
• Highly flexible platforms

Interactive Brokers

• Lightening fast trade execution
• Trader Workstation is advanced, but Java based
• IB Key technology for more security

Options trading on Interactive's mobile app is very simple. You tap on tiles representing the strikes and expiry dates you want to trade to build a spread. You can compare two potential trades with the Performance Profile tool.

Lightspeed’s mobile app is primarily intended for closing trades. It also provides real time account data.

Interactive Brokers

• Trade anywhere across PCs, web pages, and mobile apps
• Easy to navigate for both mobile and desktop

Lightspeed

• Downloadable apps for iOS and Android
• Not a superior mobile experience

Both brokers offer extensive education and research at their web sites. Lightspeed materials are better-organized, with easy-to-find information on trading strategies and software platforms. Options education is especially noteworthy, providing in-depth tutorials that cover all sorts of market opportunities. A full-featured trading glossary includes hundreds of basic and advanced topics while platform-based resources come up short, with the standard Lightspeed Trader offering limited research that includes a screener and social sentiment.

Interactive Brokers Traders’ Academy features a variety of free courses but materials don’t follow clearly-defined themes. The Trader’s Insight section is useful, with dozens of articles written by market experts but is also thematically confusing. Fortunately, drop down menus and search functions help to locate needed information in both sections. News and market sentiment is well covered through Market Pulse while an impressive variety of free and subscription research is available through the TWS platform.

Lightspeed

• Active trader blog
• Stock screener
• Watchlists and alerts
• Videos to help brush up on topics

Interactive Brokers

• Educational videos and tutorials across topics
• Trader's University with free webinars and courses
• Free and subscription research available throughout platform
• Portfolio Analyst tool useful for allocation

Interactive Brokers offers fixed and tiered pricing for equities, based on volume. The fixed rate for U.S. stocks is $.005 per share with a $1.00 minimum and 1.0% of trade size maximum. Tier pricing starts at $.0035 per share for monthly volume less than 300,000 shares, dropping to $.0015 per share above 2-million shares per month. Minimum order is 35-cents with the tiered program while keeping the maximum at 1.0% of trade value. Options cost $.70 per contract, dropping to $.25 above 50,000 contracts per month while e-mini futures start at $.50 per contract, dropping to $.15 per contract for monthly volume greater than 20,000 contracts. 

Lightspeed utilizes fixed and tiered pricing as well. The fixed program charges $.0045 per share with a $1.00 minimum or a $4.50 per trade flat rate. However, Web Trader doesn’t permit per-share pricing, instead charging the flat rate. The tiered program starts at $.0045 per share for monthly volume under 250,000 shares, dropping to $.00200 over 3-million shares. Options and futures charge $.60 per contract under the fixed program, with a $1.00 minimum. Both start at $.60 under the tiered program, dropping after a 500 contract monthly threshold. 

Interactive Brokers currently charges account holders trading in US Dollars an industry low 3.41% margin rate for loans up to $100,000, dropping to 2.41% above $1-million. Lightspeed margin fees are much higher, starting at 8.25% up to $24,999 and dropping to 5.75% above $1-million.

Lightspeed

• Stock trade fees: $4.50 per trade
• Account minimum: $10,000

Interactive Brokers

• Stock trade fees: $0.005 per share
• Account minimum: $0