Trade and Colonization: A Beginner's Guide (Updated)

Trade can be a mystery to a new player. How do those Trade Nodes make me money?

Colonization can be equally frustrating, seeing your rivals grab new lands while your stuck in the Old World.

This guide is a description strategies for Trade and Colonization designed for a beginner player in mind.

Now updated with Conquest of Paradise

Introduction to Trade and Colonization

Trade and Colonization are exciting and rewarding ways to stretching the influence of your single nation across the entire globe.

If you are playing a maritime nation like Portugal, Netherlands, England or others, your national ideas and geographical position make it almost imperative that you expand overseas with colonies.

Sometimes Colonization is optional, but trade is not. Powerful nations like Austria or the Ottomans get no national idea bonuses for colonization and are located in the heart of Europe. Most often it makes more sense for landlocked nations to spend their precious diplomatic points on things other than colonization. However every nation in Europa Universalis IV conducts trade, it is omnipresent and knowing how trade works will benefit you in every game you play.


When Trade and Colonization are executed properly and in tandem, you can make more wealth than you can possibly use.

Diplomatic Technology and Diplomatic Ideas

Diplomatic Technology is an umberella term for all technology dealing with peaceful expansion. Trade and Colonization fall into that category. Researching Diplomatic Tech unlocks better ships, more advanced trade buidings and extends your colonial range.

Diplomatic Ideas are the only way to get colonists and merchants (Unless you are a nation that unlocks them for free).

Now with Trade Companies, you can designate certain oversea areas. If you own more than half of that area, you get an extra merchant.

Here's a short rundown:
Exploration Ideas: Good for early game colonization. Explorers and Conquistadors for conquering the natives of the new world. Grants 2 extra colonists.

Expansion Ideas: Good for late game "colonization" i.e. expanding into India and China by conquest. Grants an 1 colonist and 1 merchant.

Trade Ideas: Extra Income from trade and 3 more Merchants.

Naval Ideas: Allows you to build more light ships to increase your trade power. Improves your navy so you can defend your far-flung colonies.

If you are a nation that wants to specialize in Trade and/or Colonization, spend your money on hiring the highest skill diplomatic advisors possible. Having more Diplomatic points to spend on Technology and Ideas is by far the biggest factor in determining trade and colonial success in the long run.

Portugal in 1670 has invested in ideas that are focused on advancing trade and colonization. Notice that of the Ideas chosen by Portugal, 4 out of 6 are Diplomatic Ideas, which require Diplomatic points to unlock.

In the same vein, spending your precious diplomatic points on culture conversions and reducing war exhaustion will delay colonizaton and delay your trade development. Spending diplomatic points on culture conversions can hamstring the early colonial efforts of nations like France and England, who have unaccepted cultures within their borders. You must make hard choices about whether to consolidate your position on the continent of Europe or to expand overseas.

You will find that investing only in Diplomatic ideas will leave you either with an excess of Administrative and Military points or falling behind in Diplomatic Technology. It makes sense to invest in some non-Diplomatic ideas just to keep your points balanced.

Sometimes your Monarch will have a low Diplomatic skill. Sorry, I know that sucks. Just keep hiring high skill advisors and the law of averages will swing in your favor eventually.

Conquest of Paradise: How to Colonize

Assuming you start game in 1444, the late Middle Ages, your colonial ambitions are limited by the technology of the time. Barques are the first light ships of the game and they are fragile. They will take a large amount of attrition in the Ocean and will sink if you try to sail them to the Americas in one trip.

If you want to be an early colonizer, the diplomatic Exploration Idea is designed to stretch the limits of early Renaisance technology in order to reach the New World. Unless you are Potugal, or maybe Castile, I would not recommend getting Exploration as your first idea. The reason is because your colonial range will not be enough to reach the New World until your Diplomacy Tech reaches Level 7

Portugal and Castile can colonize Rio de la Oro and the west coast of Africa as soon as they do get Exploration Ideas, but the natives there are strong. They must be destroyed or you must garrison these African colonies until they become a city.

Purchasing too many Diplomatic ideas at once will leave you behind in the Technology race. It is best to use Light Ships to explore. In order to not lose ships to ocean attrition, explore only 1 "Terra Incognita" ocean tile at a time. Send your ships back to port to repair and then send them out to explore the next tile.

Soon you will reach land, the interior itself may not be visible until you move a Conquistidor into it, but if you sail around enough coastline, eventually it's interior will become visible.

Alternately, if you are late begin colonization, you can simply wait for the knowledge of new lands to spread and colonize already explored areas. This is a viable strategy if you aren't completely focused on colonizing and have European affairs to deal with.

You cannot send a colonist to this newly discovered land until you have enough colonial range. This range can be extended by researching the "Overseas Exporation" Exporation Idea and by researching Diplomatic Technology. Portugal and Spain begin the game with island core provinces which extend their Colonial Range a small but significant amount.


If you are not Castille or Portugal, consider the option of taking one of these island outposts and turning it into one of your own. This will allow you to colonize the New World sooner. However these nations have strong navies so this can be difficult.

Alternately establishing a colony south of Morrocco, around the provinces of Rio de Oro or Arguin, will be helpful to extending your colonization range.
The natives around this area are very hostile. Before you colonize Rio de Oro, it makes sense to exterminate the natives with an Army (more than 4,000 men) to make certain your colony is a success. Use the "Exterminate Natives" button on the Army info screen. After your colony grows into a city, make it a core and you have an jumping off point to colonize Brazil, the Caribbean or further south along the coast of Africa.

If you are unsure which lands your colonists can reach, use the Colonial Mapmode. All provinces your colonists can reach are displayed in green.

This is the Colonial Mapmode:
In the 1492 scenario, Portugal has a core on the island of Ferdinand Po, which allows them to colonize a large part of Africa. Don't ask me how they managed to reach Ferdinand Po in the first place.

If you don't want to have your colonies fail, shop for areas with low native hostility. The Cape and Little Karoo are notably friendly to colonists, if you can reach them.

Where to Colonize: Trade and Colonization Synergy

It is vital that your colonies are connected to your home trade node, therefore some areas you do not want to colonize due to the placement of the Trade stream.

This is how Trade used to flow in North America:
The way things used to work led to European nations colonizing the same areas in every game.

The addition of a Western Europe node, a Gulf of St. Lawrence node and a rearragement of the North American nodes has changed the landscape. This is how it flows now:

As you can see there is a lot more flexibilty, but you still must carefully consider where you want to put your colonies to maximize income.

The most important nodes in any given game are usually Chesapeake and Carribbean. These nodes give you the most access to the interior nodes and allow you to direct trade to or from the Western Europe trade node.

Also very significant is the Gulf of St. Lawrence node, which is the only node Hudson Bay flows into. If you want to dominate the Hudson Bay node, it is a prerequisite that you dominate the Gulf of St. Lawrence Node.

If you cannot dominate the Western Europe node, control over the Mauretanian and St. Lawrence node allows you to direct trade around it, avoiding competition in Western Europe. This makes it attractive for Scandinavia/Scotland to colonize the St. Lawrence node and for Spain/Portugal to colonize the Mauretanian Coast node.

Birth of a Colonial Nation

The Conquest of Paradise DLC came with a patch which added colonial nations to the game. Once you own five cored provinces in any given colonial region, a colonial nation will form. It is important when colonizing to know where they are.

The Wealth of Nations DLC/patch update promises to add a colonial regions to Australia.

Once a Colonial Nation has formed, any more provinces you colonize in that region will join that colonial nation. It often makes sense to continue to colonize after the colony has formed to help your colony develop.

The fact that you must have five cored provinces is especially important when you are conquering/colonizing the colonial region of Mexico or Peru. If you have taken provinces from natives, but have not cored them, they do not count towards the 5 provinces needed to form a colonial nation. Do not core more than five native provinces in any given colonial region.

For example: You have colonized 3 provinces in the 'Colonial Mexico' region. You declare war on Aztecs and conquer 7 provinces from them. You spend ADM points to core two formerly Aztec provinces. Once the coring of the 2nd province is complete, your colonial nation will form in Mexico. This colonial nation now has automatic cores on all territory you formerly directly controlled.

After a colonial nation has formed, any province you conquer from the New World Natives the designated colonial nation for that region will take control of this province. They will core it so you don't have to.

If you have moved your capital in the New World, colonial nations will not form. Fortunately you don't have the "distant overseas" tax/manpower modifier so that's not so bad :)

You can only play as a Colonial Nation if you have purchased the 'Conquest of Paradise' DLC. Some people dislike the fact that Colonial Nations form, seeing it as a loss of power, but I disagree.

Loving your Colonies

Colonial Nation's Pro:
They are your vassals and fight for you, while not counting against your Diplomatic relations limit.
They can contribute a large amount of income and trade power to you.
They colonize lands for themselves and can conquer lands from natives and other nation's colonies.
They add depth and realism to the game.

Colonial Nation's Con:
Provinces no longer directly contribute taxes, trade power and manpower.
They can lose wars and territory.
If you do not keep their liberty desire below 50%, they can rebel.

I have not found it difficult to keep my colonists loyal. To keep colonial nations from rebelling, always give them the person they ask for when a replacement viceroy is needed. Sometimes they will ask to keep the same governor, this is fine just pay attention to the text of the event. You will take a -5 prestige hit when you give them the governor they want, so make sure you are getting prestige from other sources. When selecting the Viceroys of Colonial Nations, I generally choose the 'Diplomatic Candidate' because this helps your colonies colonize for themselves and improves their income.

If you feel like you are missing out on direct resources by having colonial nations, check out how much taxes/manpower other non-New World colonial provinces are giving you. Not much, because of the brutal -75% "Distant Overseas" modifier. Your colonial nations have no such modier, so they are utilizing these provinces to their full efficency.


Here as Spain in 1650 I believe I am getting much more income from my Colonial Nation subjects than I would if I owned the provinces outright. I have raised my tariff efficency so that their liberty desire is 45% to 50%, but no higher. The only downside of this is that I take a -5 prestige hit relatively often when I give them their governor, but I win lots of wars using my tons of money to compensate for that.

All in all I believe that Colonial Nations were designed to be a benefit and I think in most circumstances they are. I do not hold to the belief that just because a province now has a slightly different shade, it is a net loss for my empire.

What Trade Does; how it makes you money

Trade is the flow of goods generated by provences. In each node a nation is either collecting money from trade (which removes it from the stream) or pushing it along to the next node.
By most late games, your Trade income will surpass your Tax income if you have been smart about where to make your trade investments. Knowing where to steer trade and build Trade buildings will secure your nation financially reguardless of whether or not you have colonies.

You want to have as much trade as possible flowing to nodes you collect from. You also want to be collecting trade from the node where you have the most power in.


As you can see the Trade node areas do not follow national borders. For each country you play as, you need to look at which Trade node areas are inside your country and decide which ones you want to concentrate on.

For example France has 3 trade node areas within it's borders, but it has a monopoly on none. Bordeaux is by default France's most powerful Trade node, inside the Bordeaux zone it has it's most productive provinces and it's capital. It makes sense for France to collect from Bordeaux, but it can also collect a significant amount from Antwerpen.

A viable strategy for France would be to collect from both Bordeaux and Antwerpen and build trade buildings in provinces in those trade node areas.

Increasing trade value will increase the size of the pie, increasing Trade Power will increase your portion of the pie. Building trade buildings will do both for you.

Some trade nodes you may simply want to write off. Many provinces in Spain fall under the Bordeaux Trade node, but they must compete with France for trade power. In Spain's case it may make sense for Spain to not build many trade buildings in northern Spain and concentrate on the Caribbean trade node once they have colonies there.

Steering

You might have heard that term before, but here's what it is. You can place Merchants in nodes to change the direction of trade and move it where you want it.


Here is an example of a before and after steering situation:
With no Merchant in Alexandria, the Ottoman's monopoly is being wasted by being split 3 ways. Only a third of the wealth is going to Constantinople to be collected.


By placing a Merchant, all of the trade in Alexandria is being steered toward the Ottoman collection center in Constantinople.



Steering is valuable even if you don't have a monopoly.


Here we see sneaky British and Dutch merchants placed in Bordeaux steering trade from Bordeaux to London and Antwerpen. The French are collecting from Bordeaux but even though the British and Dutch control no provinces, they are moving half of the total trade in Bordeax to London and Antwerpen. The power generated by the British and Dutch light ships gives them a significant amount of power, which they used to steer trade away from the French.

The final words about Trade Steering. In nodes that have have only one branch, all nations that want to transfer trade forward cooperate. It does not make sense to spend a Merchant to steer trade in a node where it only can go one way.

Global Trade Empire, Light Ship bonanza

Once you have enough Merchants, from unlocking Ideas, you can set up a chain stretching across the world to bring it's wealth to your home port for collection.

To assist in this, settle and capture colonies at strategic points to give you access into divergent trade nodes.
Having light ships patrol around a trade node increases your share of the trade power in the node, whether you want to collect from it or steer trade to the node you want.

Around 1750 you'll notice that all of the empty and habitable areas have been filled up and there is no place left to "peacefully" (to everyone except the natives) expand. If you are a European nation the technology gap between you and the Chinese and Indian cultures has widened to the point where taking territories in war is relatively easy. With the Expansion ideas fully researched, the "Colonial Conquest" Cassus Belli will be helpful.

This map shows how Spain, by capturing colonies, building trade buildings in them, having light ships patrol nodes and finally placing merchants to divert trade away from the nodes in the Middle East it does not control, has diverted a significant about of global wealth to Sevilla.

It should be noted that if France builds up it's Trade Power in Congo, it could take a significant part of that away.

To accomplish this, the Spanish have built a massive trade fleet.




Having to pay an extra 320 gold per month for the upkeep of 1145 light ships is worth it. Spain is making an income of 3247 gold per month from collecting from trade in Sevilla

Final Note: Small can be Beautiful

If you are a tiny nation, you have an oppurtunity to make your trade strategy much more efficent than that of your giant neighbors.

Virtually all nations start with 2 merchants. If all of your provinces are in a single Trade node area, you can use your other merchant to steer trade toward your node.

Venice, Genoa, Portugal and the Netherlands have many fewer provinces than their rivals, but this can be an advantage. Large nations must waste Monarch Points, 10 per building, upgrading all of their many provinces with buildings, while it is easy for small nations to build the maximum of buildings their provences can support without crippling their research. Advisors are cheaper for smaller nations as well.

All nations recieve the same number of colonists as long as they have the same Diplomatic Ideas. This can mean that tiny, one-provence Parma on the coast of Italy can colonize at virtually the same rate as France.

[Andromalis]

I've read your answer, thank you very much. Every year or so I check the payouts from trade protection and adjust my light ship fleet accordingly. I have a limit of 200 ships in my navy, so putting them all inside of a single node is almost certainly a bad idea, like you mentioned. I'd have to perhaps do a case study on this, because it seems interesting :D

[Frolix]

Fundamentally, Lights protecting trade increases your trade power, which increases your share of the pie, but doesn't increase the size of the pie, so there's a point of diminishing (or even negative) returns.

Of course the answer is "it depends", but if you have 110 Lights then you probably should be monopolizing the node(s) you're collecting from, and using your light ships to steer trade towards that node.

What you should do is experiment with shuffling your ships around, try a few months of steering in one node, then adding and removing ships and watching the effect it has on your trade income.

Let me know if you read this advice, it's been almost a decade since I thought about this guide.

[Andromalis]

Should i Patrol Trade Routes along multiple trade nodes? Currently I'm just using my massive 110 light ship fleet to patrol a single node. Will splitting those 110 ships into, for example, 4 fleets - and then patrolling different nodes - bring more income?

[ShadowBoomer]

Frolix: Thanks for the guide. It is very helpful to a newbie like me. Reading it twice.
Cool Beans

[Hipparchia]

Hello sensei, If you have time I suggest a small update for the last extension (Art of War) and its patch

[Zeferrus]

Excellent guide with great examples and specific cases. Almost everything in the game itself is unclear regarding trade. Was worth reading it through twice.

[KVBM]

All hail the uploader

[HardyKnox]

Very helpful guide for those building a trading nation hoping to avoid expensive wars and to invest wisely. The trade-offs between collecting and steering are confusing and this helps me understand better the complexities.

[Grim Gham]

ok, thanks

[Frolix]

no. Your CK2 save is converted into a mod of EU4. I'm not even sure if you can use Ironman with a mod. If you can, you still won't get acheivements.