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This is the kind of thing I'm looking for, Thanks! In the tutorial they briefly touched on trade and didn't really explain the arrows and the end nodes as well as I would have liked. Does this mean I shouldn't focus transferring power at all if the node doesn't have an arrow flowing to my main port? (I'm playing as a small country so I have very limited resources at the start of the game) Can I put multiple merchants on a single node?
So you're saying that if I have an unused merchant it will just stock pile the trade power in my home node by 10?
Merchants transferring does not give a flat 10 trade power. It gives 10 PERCENT trade power in your capital node for every merchant you have transferring, so long as you do not have a mercahnt collectinf anywhere besides your capital node.
That would explain why all flow heads towards europe at the start of the game... but if you made Japan a power house (by developing all of the Nippon Trade territories) then trade should flow towards Japan and not merely through it. You might even be able to strangle european trade that comes across the pacific.
Trade really needs to be a more dynamic political tool and not just a way to siphon money off the stream as it passes by.
All provinces generate 'goods' (goods produced modifiers increase these) through a combination of their production development value (the one that looks like a house) and the value of their local trade good (fish, salt, iron, etc). The amount of value of those goods is then added to the trade node that province is a part of (see the Trade mapmode, examples include Genoa, Wien, and Carribean) and is termed *Local Trade Value*. Trade value is therefore a theoretical amount of money the goods being shipped along the trade network are worth, and your home node (or a merchant set to collect trade) transforms that theoretical value into real ducats.
A trade node contains a *Total Trade Value* of its *Local Trade Value* plus all incoming trade value from upstream nodes. More on that in a second. Every nation has a *Home Trade Node* where they collect their income from the trade network. This is usually your most important trade node.
Within a node, many nations compete for control of trade. This is represented by a value called *Trade Power* which can be influenced by many factors. A country's *Trade Power* is a composite of *Provincial Trade Power* (the power produced by owned provinces within the trade node's region, influenced heavily by your *Mercantilism* value), transferred power from nodes downstream (this is usually negligible), the presence of a merchant, and power added or subtracted by light ships performing *Protect Trade* or *Privateering* respectively. Your percentage of the total power in a node determines how much money you collect (if collecting trade or at your home node) or transfer downstream/upstream.
While on the subject of *Trade Power*, trade nodes are classified as either domestic trade nodes or foreign trade nodes dependent on a country's share of the trade power. This can affect your power if your nation has ideas or traditions that affect domestic or foreign trade power. Also worth mentioning is *Caravan Power* which is, simply put, a bonus to trade power in inland nodes to compensate for their generally weaker trade value overall. Embargoing or being Embargoed cuts trade power in ALL SHARED NODES BETWEEN THE TWO NATIONS by approximately half. This can be a big cut in income, so be careful before starting a trade war with Venice, for example.
Ok, so now we've covered how *Provincial Trade Value* enters the trade network and how your *Trade Power* determines your control of what happens to that value, let's talk about the trade streams. Every trade node in the game has a series of connections to other, adjacent nodes in the trade network. These connections are classified as upstream or downstream and indicated by arrows showing the direction trade flows along the network. Trade enters a node from upstream nodes and exits the node towards downstream nodes. Thus, trade always flows along the network towards the three 'end nodes' which have no downstream nodes connected to them. Venice, Genoa, and The English Channel are therefore the most critical and lucrative trade nodes to control, but remember that trade has to make it all the way through the network to get there! this makes bottleneck nodes like Ivory Coast and Gulf of Aden critical for controlling where trade goes.
With no merchants in the node, the default function is for every nation who considers the node a home node to take their cut of the income, and then every nation with power in the node who does not consider it a home node to transfer trade power to the next node in the most direct route to a downstream home node. Power can be transferred upstream in certain circumstances, but transferring power upstream is immensely inefficient and will almost never yield a major impact on your trade power.
The presence of merchants complicates this immensely. A merchant in a node can either *Collect from trade* and transform your percentage of trade power in the node directly into income, removing that value from the trade node and denying it to nations downstream from the node, or *Transfer Trade Power*. Most of the time, you will be placing merchants to transfer power and trade along the trade network towards your home node, where you (usually) have the most power and can collect the largest percentage of the value in the network. The presence of a merchant at a key trade node allows you to redirect trade towards places where you have a strong trade presence and away from areas where enemy nations have the advantage. In addition, there is a bonus to the value of goods transferred by a merchant, so having a long chain of merchants sequentially transferring trade can multiply your income substantially IF you can prevent other nations from collecting the value of those goods along the way. Play around with merchant locations and see how the value on the network shifts and you'll get the hang of it pretty fast.
Hope that was helpful! Enjoy your monopoly on global trade :)