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You can see the level of trading in the windows...
Level 1 =10..level 2 =40..after, i don't know..
If you put your mouse on it ... you will see an advice..
For me it is the same I only have lvl 2 and close to being done with this village and what I wanted to accomplish in it but others who have played up to 1000+ villagers have got trade routes to lvl 7+
Were you able to obtain "How do we arm the others" with level 1 trading? That achievement is why I wanted to upgrade my routes, but if it's possible without it I will just start trying for it.
The answer is annoningly easy once you realize it (it took me a while too). Under each trade faction theres a "Buy 0/30" (green) and "Sell 0/30" (red). You need to buy 30 items AND sell 30 items within a month or something, then the counter resets.
Once you have bought 30 items and sold 30 items a curior will appear and give you a choice to upgrade the trade route. The price is 500 g OR 10 factioncoins at level 1. (In order to get it in time i suggest buy atleast 2 items and sell 2 items, to reach the mark before reset).
Lvl 1 -> 2: 30 bought and 30 sold, 500 g or 10 coins
Lvl 2 -> 3: 120 bought and 120 sold, 2000 g or 40 coins
Lvl 3 -> 4: 270 bought and 270 sold, 5000 g or 100 coins