Trading in EU4 can be quite unintuitive, but once you understand how it works, it's quite easy to manage it.
So here's my Trading in Eu4 101 with pictures, starring my trusty vassal BigMackl:
As you can see, he's quite a unit, but nonetheless, most of his income comes from trading. So how is he doing that? How can my republic be as rich as BigMackl? Do I need to 200 Light Ships for that? Well, let's see...
Nope, AI being retarded as it is, has sunk most of it naval capacity into Heavy Ships, Galleys and Transports. Only 5 ships are currently Protecting the Trade. But BigMackl can rake its fat stacks of money regardless of that, by focusing on other things.
But before we get into that. We need to know what makes any business successful. There are 3 key things to that and those are: location, location, LOCATION!
As you can see in that red box, BigMackl has that covered, by sitting in quite rich trading node, that gives it +28.53 Local Trade value to begin with. Where does this number comes from? It's simply number of Goods Produced x its Price, from each and every province that belongs to that node (marked red on the map). When someone builds a Workshop, Manufacture or raise Base Production development in such province, this number goes up.
But in this case, way more goods are coming into this node from elsewhere, as shown in the Incoming number. BigMackl helps with that, by sending his merchants to other nodes to Steer Trade in appropriate direction (red circles).
Still, to actually get your hands onto that pile of moolah, you need to have lots of Trade Power, and there are two ways you can get that.
As you can see in the box, Trade Powers comes either from Light Ships or Caravans (depending on whether Trade node is sea based or land based) or Provinces, and then it's later modified by various stuff.
Now, Light Ships are based on well... having Light Ships do appropriate Missions in the node. Caravan power is based on your total development, but it's capped at +50, so it hardly matters anyway.
Provinces are much more interesting, because when it comes to trade, not all provinces are created equal.
As you can see, BigMackl has many provinces in the node, but in reality only 3 of them matters. So what makes Hamburg 10x more important than the 4th one on the list? Let's take a look:
Those tiny pictures marked in the red box are what make Hamburg that important. Those are Estuaries and Centers of Trade. Some provinces have either one of them or both. And they're super important, because those raise Base Trade Power, which you can further enhance by building Marketplace, Trade Depot or Stock Exchange. Without them, even +125% to fuck-all is still fuck-all. So don't build Marketplaces in provinces without them, or you'll make Baby Jesus cry. Unless you're already at the point in game when you earn more money than you can spend, then like whatever, do what you want. At that point Baby Jesus doesn't care anymore.
But before you go and dominate your first Trade Node with ships or properly developed key provinces you hold, let's look at modifiers first:
There lots of things that give you boni or mali to Trade Power: Ideas, Traditions, Prestige, Power Projection, Events etc. But what's that "Transfer from ..." stuff? Those are your merchants, steering trade from upstream. They don't need to be in continuous chain, just somewhere upstream and NOT COLLECTING. When you collect somewhere and that "somewhere" isn't your Main Trading Node, you're gonna lose all that bonuses. All of them. Not to mention, you're gonna get slapped with hefty penalty to your Trade Power, just like Sweden in this case:
Sweden's main node is in Baltic, so they get -70% for collecting in Lubeck. Plus whatever they lose in Baltic by not having those transfer bonuses applied there as well. And they have both Trade and Expansion Ideas unlocked, so that gives them at very least 6 merchants for potential +60% Trade Power.
I don't know why Sweden's AI simply haven't moved their Main Node to Lubeck, maybe it doesn't have diplo power to do that. Or maybe it did the math and calculated that it's still marginally better off the way it is now.
Anyways, be like BigMackl, not like Sweden.
Now, what does all this Trade Power stuff gives you? It gives you a slice of the pie, more power equals bigger slice obviously.
In our case, BigMackl gets 30% of the pie. I know, I know, tooltip says 30% of Trade Power "among countries Collecting from Trade", but tooltip is wrong. It's total Trade Power in a node. You need to trust me on that, but there's another tooltip I didn't screenshot, that says that BigMackl "collects 32.56 gold from that Trade Node", so it's 30% of all the goods that are Local + Incoming. Outgoing is simply what's left after countries that are collecting are done, and that amount is transferred further downstream. That makes Total, well, quite simply the total amount that is collected by all the countries that are collecting in the node.
"But wait", you're gonna ask, "how come our hero BigMackl makes 80 gold in profits, when it only collects 32.5 gold from the trade? And this is where another modifier, called Trade Efficiency comes into play.
This is all the stuff that modifies your actual income. As you can see, it grows naturally with tech, but there are also plenty of stuffs that add to or subtract from it, from Policies through Advisors, to estate loyalty. Long story short, when you multiply 32.56 that is collected by 246% from Trade Efficiency it gives you your final profit of 80.1 gold per month from trade.
So to summarize all of that above, how to make money from trade:
1. Find a rich Trade Node, or
make your Trade Node rich by producing goods locally or steering trade into it
2. Dominate it with your Trade Power either by controlling key provinces or sending Light Ships or both
3. Stack on appropriate modifiers to (Global) Trade Power and/or Trade Efficiency to maximize profits
