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You can daisy chain merchants transfering trade power to a node you have a firm grip of.
- build marketplace and the upgrades in the provinces with Center of Trade, don't bother without center
- build light ships and send them to Protect trade in the node that shows most increase
- you usually want to have merchant to collect in your Home node and other merchants to Transfer trade into your Home node.
You could make some experiments with placing merchants, letting month to tick up and Trade income to update, then switch one merchant to other node and compare the Trade income once it updates again. If it went up, keep merchant in new node, if it went down try another combination or return to original. Within few tries you should be able to get good combination and just leave them until you gain more merchants or have expanded a lot.
1) Each trade node calculates the static power (provinces, trade ships, merchant, misc bonus) and power modifiers for every node.
2) starting with the end nodes the modified power is determined and downstream power is calculated and added
3) starting with the origination nodes (basically reversing the order of the previous step)
a) trade value in the node is determined (incoming value + value produced in the node)
b) the trade value is split proportionally between the amount collected and the amount being steered out of the node (simple % of total trade power applied, you can see the pie charts)
c) the value being collected is split proportionally among the nations collecting in the node then modified by the applicable modifiers to determine the final amount collected in the node for each
d) the value being pushed out (if any) is divided among the outgoing paths and multiplied for steering merchant bonuses to determine the incoming amount for later nodes
The outbound trade is NOT split proportionally to the trade power of all nations pulling trade out of the node. Instead all nations with merchants present and steering have their power multiplied by their trade steering bonus and that power is applied to their link (for example an English merchant steering in Champagne would have their power applied to the Champagne->English Channel link). The outgoing value is then split based on the power on each outgoing link, if no merchant is steering on a particular link it will have 0 power and get no value unless no link has power (i.e. no merchants are steering in that node at all).
That's how the system works.
Some things to be aware of:
1) collecting in a node other than your capital (or main trading port if you have the DLC) causes all of your trade power in that node to be halved (if you would normally have 100 tp then switching from steer trade to collect would drop your power to 50)
2) if you are not collecting in any node other than your "home" node then you get a 10% power multiplier applied in your home node for every merchant you have steering trade somewhere. There is no limit on that effect beyond the limited number of merchants you can have.
3) if you have a merchant assigned to collect trade in your "home" node then you will get a boost to the amount of income you generate in step c above
http://eu4.paradoxwikis.com/Trade
https://www.youtube.com/watch?v=edjLVFMjPyo&t=1s
If you have anymore questions, feel free to ask.