In fast-moving markets, traders need the ability to play both sides of a trade — long and short. While most understand the mechanics of buying low and selling high, fewer are familiar with the reverse: selling high and buying back lower. That’s the foundation of short selling — and it comes with unique requirements, especially when it comes to borrowing shares. At TradeZero, we’ve developed a locate system designed to give active traders access, flexibility, and clarity when short selling. Whether you're executing short-term trades in Non-Easy-To-Borrow stocks, holding size overnight, or managing multi-entry setups throughout the day, understanding how locates work is key to your execution strategy. The Basics: What Is Short Selling? Short selling involves selling shares of stock you don’t own, with the intention of buying them back at a lower price. Since short selling involves borrowing, it requires a margin account and a broker with access to a robust inventory of lendable shares. Once you “cover” the position, the shares are returned to the lender. Easy to Borrow vs. Non-Easy-to-Borrow Each trading day, brokers receive an “Easy to Borrow” (ETB) list from their clearing firms. These lists include highly liquid, large-cap stocks that exist in ample supply — like Apple or Microsoft — and can generally be shorted without additional action. Stocks not on that list are classified as Non-Easy-To-Borrow, and additional steps are required to short them. That’s where locates come in. What Is a Locate? A locate is essentially a permission slip to short a stock that isn’t on the ETB (Easy To Borrow) list. When you request a locate through TradeZero’s platform, it’s important to understand: Accepting a locate does not mean you’ve shorted the stock. It simply grants you the ability to do so. Locate fees are charged at the point of acceptance, regardless of whether you end up placing a short trade. The Three Locate Classifications at TradeZero TradeZero offers three distinct short access types, each tailored to a specific regulatory or trading scenario. 1. Standard Locate TradeZero locates can be used for both non-threshold and threshold securities that are not on the Easy to Borrow list. However, how you can use the locates depends on the security type. For non-threshold securities, a locate allows you to short and cover multiple times intraday using the same borrow. It’s an excellent resource in this scenario as it can be used again and again. For Reg SHO threshold securities, a locate is valid for only one short sale and one cover. To short the same threshold stock again, you’ll need to request a new locate. It’s for this scenario that we developed the Single Use Locate (see below). This distinction is based on regulatory requirements governing the reuse of locates for threshold-designated stocks. 2. Single-Use Locate TradeZero’s new Single-Use Locate is designed specifically for Reg SHO Threshold Securities — stocks flagged by exchanges after five consecutive days of failed delivery. These symbols are considered especially hard to borrow. Key characteristics of TradeZero’s Single-Use-Locate: Only valid for one short sale and one cover Not reusable — a new locate is required for each short entry Typically more affordable and accessible than regular locates and pre-borrows for threshold stocks This tool provides a cost-effective way to short threshold names without needing a full locate or pre-borrow, particularly if you’re looking to take a single position during the session. 3. Pre-Borrow Pre-borrowing allows you to secure shares in advance, typically for threshold securities, and use them for multiple intraday short entries and exits. These shares are held directly in-house, meaning TradeZero has already taken custody of the borrow — significantly reducing the risk of buy-ins. Pre-borrows are especially useful if: You plan to hold a short position overnight You intend to actively trade the same threshold security multiple times throughout the day While pre-borrows generally come at a higher cost, they offer additional flexibility and lower the operational risk of losing access to shares mid-session. Marking Locates for Credit TradeZero’s proprietary locate technology includes a unique feature: marking for credit. If you’ve accepted a locate, single-use locate, or pre-borrow and no longer need it, you can return it to the locate pool. If the shares are reassigned to another TradeZero customer, you can receive a partial credit on the original locate fee. This system not only helps reduce trading costs but also enhances inventory availability for all users, particularly on high-demand HTB (Hard to Borrow) stocks. Why This Matters for Short Sellers Short selling opportunities can disappear quickly if shares aren’t available. TradeZero’s real-time locate tools help traders: Quickly assess availability of HTB shares Choose between standard, single-use, or pre-borrow based on strategy and cost Execute trades with more confidence in Non-Easy-To-Borrow environments With the launch of Single-Use Locates, Reg SHO threshold stocks are now more accessible and more affordable, enabling short sellers to react quickly without overcommitting capital. Know the Risks of Short Selling While TradeZero offers robust short-selling tools, traders must understand the risks involved: Unlimited loss potential: If the price of a shorted stock rises indefinitely, so does the potential loss. Margin requirements: All short sales require margin and are subject to leverage rules. Fees: Additional costs include locate fees, borrow interest, and potential buy-ins. Short selling is not for everyone. Make sure you fully understand your exposure, costs, and risk tolerance before engaging in short trades. Special Offer for New Funded Accounts To support the launch of Single-Use Locates, TradeZero is offering: 5% discount on all locates for the first 3 months 3 months free access to our flagship ZeroPro platform 1% cash bonus on your initial deposit for International & US clients. 2% for Canadian clients Open An Account Now. TradeZero America TradeZero Canada TradeZero International It’s a great time to explore our advanced locate tools and short-selling support. Final Word Short selling requires more than a strategy — it requires access. TradeZero’s locate classifications give traders the tools they need to move with speed, control, and efficiency. Whether you're trading threshold securities, non-ETB stocks, or preparing to hold overnight, our locate system is built to help you manage risk and opportunity more effectively. TradeZero. Find your edge. Disclaimer TradeZero America, Inc., a United States broker dealer, registered with the Securities and Exchange Commission (SEC) and member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC); TradeZero, Inc., a Bahamian broker dealer, registered with the Securities Commission of the Bahamas; and TradeZero Canada Securities ULC, a Canadian broker dealer, member firm of the Canadian Investment Regulatory Organization (CIRO) and member of the Canadian Investor Protection Fund (CIPF) (collectively the “TradeZero Broker Dealers”) are subsidiaries of TradeZero Holding Corp. TradeZero Broker Dealers offer self-directed electronic securities trading to their customers. TradeZero Broker Dealers do not provide financial or trading advice and do not make investment recommendations to their customers. This communication does not constitute an offer to sell or a solicitation to buy any security or instrument which it may reference. There is a risk of loss in online trading of securities including equities and options. Trading on margin is for experienced investors only as the amount you may lose can be greater than your initial investment. Likewise, short selling as a securities trading strategy is extremely risky and can lead to potentially unlimited losses. If you have any specific questions about TradeZero’s brokerage services, please reach out to the TradeZero Broker Dealer in your jurisdiction. EliteTrader is a paid marketing partner of TradeZero that receives compensation from TradeZero for broadcasting, displaying, and/or presenting marketing and sponsorship materials that promote TradeZero and the TradeZero Broker Dealers.
Past performance is no guarantee of the future. Results may vary. Holy Grail may not work. Loss of money is substantial. Proceed with caution. Thank you for being a valued customer. Have a Nice Day* Zero Trade