The following is a summary of the advice given by OG Gleep on the use of merchants. I thought I would post it here for people who want a quick answer to their merchant questions and issues.
MERCHANT OVERVIEW
Merchants make money by two means:
Trade: By standing on a trade resource they earn trade income from that resource every game turn. The amount of revenue earnt per turn depends on a) the type of resource, b) the skill of the merchant and c) the distance of the resource from your capital.
Hostile Takeovers: By attacking another merchant they can take over that merchants business and in doing so they earn an instant profit of 250 florin’s per level of the merchant taken. E.g. An 8 star merchant earns you 2,000 florin’s.
Merchants gain star’s by trading and from takeovers.
OPENING TACTIC’S
Unless built in a city with a Merchant Guild, new merchants are created without any stars, they are totally unskilled and are therefore not going to bring in much income and are vulnerable to hostile merchants. Merchants trained in a Merchant Guild emerge with 1 Star.
INITIAL TRAINING
Before putting your merchants at risk they need to be given some basic training. Find some local trading resources in an area away from enemy merchants and just leave them to trade peacefully for a few turns. Keep an eye on them and make sure that if a hostile merchant approaches to move them away from their trading resource so that they are not eliminated.
NOTE: AI controlled merchants only perform hostile takeovers against merchants that are actively trading. So, moving a merchant off the trade resource will protect it from enemy merchants.
Keep your new merchants trading locally until they achieve a 3 STAR skill rating.
3 STAR MERCHANT TACTIC’S
Once a merchant achieves a 3 STAR skill rating pair them up with a spy and send the couple into hostile territory.
The objective now is not necessarily to trade but to indulge in some hostile takeovers. The best area I found for this was northern Italy, but you may find other area’s equally as good.
The spy’s job is to spot enemy merchants and warn your merchant whether they are dangerous or ripe for a takeover. If the enemy merchant is a Noob then consider trying a hostile takeover even if it isn’t actually trading. This will gain your merchant 250 florins per star and rapid experience. When there are no merchants in the area use your 3 star merchant to earn some quick revenue by trading local resources. You should be able to make about 200 florins per turn from a 3 star merchant.
Keep operating your merchants like this until they hit the magical 8 Star skill level.
8 STAR MERCHANT CASH COWS
As soon as a merchant reaches 8 stars its time to go for the big bucks.
Choose an area where the trade resources are worth bg money and move your merchant and his escorting spy there asap.
The best area’s are:
1. Russia – Trading Amber
2. North Afrika, South edge of the map near Timbuktu – Trading Gold and Ivory
3. Asia Minor (Around Constantinople) – Trading Silk
4. Stockholm – Trading Amber (watch out for Danish Merchants, they like it here.)
Use your spy to keep overwatch for income enemy merchants whilst your 8 Star merchant cashes in on the big profits to be earnt from these remote resources. Daily income from each 8 star merchant should be about 700 – 1000 florins depending upon resource etc..
Keep the chain going, as merchants and spies grow old and need to be replaced.
Don’t try and trade blindly, if your spy dies stop trading until a replacement can be found, its not worth risking your 8 star merchant getting mugged by leaving him on a resource without being able to see who is coming.
Merchants need a lot of micro-managing but if properly trained and deployed they can earn good money.
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