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General rules:

  • Don't settle on small islands. The bigger the land the better. It's best to have all colonies close to each other, within 1 or 2 turns on horseback, or have all colonies in no more than 2 such groups. Vast empires are hard to defend and manage.
  • Don't settle right next to an Indian village. If you do, wipe it out as soon as possible, or the troubles will come. Generally try to avoid the Indians, especially the less civilized ones. It's great if you can settle far from them, but it's usually not possible.
  • The more special terrains the better. In a typical strategy, silver and cash crops are most important in the early game, lumber, ore, food and fish later. Alternatively you can limit your cash crop production and focus on ore immediately and food/lumber soon afterwards.
  • Settle close to your other colonies, but without overlapping ranges. 3 squares (1 turn over roads by non-mounted units) from one colony to another is optimal, 4-6 acceptable (1 turn by wagon trains, 2 turns by non-mounted units). A distance of only 2 squares between colonies is bad because of overlap (but 2 spaces diagonally, i.e. only 1 square of overlap, is acceptable); also 7+ (2+ turns by wagon trains, difficult defense) is bad for defensive reasons.
  • If the place you want is already taken, think about conquering it.
  • Minimize the number of useless squares. That includes Arctic, Desert/Scrub Forest (except for Oasis), and overlapping squares.

For your first few colonies:

  • Don't settle inland. You need wagon trains, roads and warehouses for that to work.
  • Don't settle next to too many ocean squares. Only 1-2 ocean squares is optimal, 3 acceptable, 4 or more bad. You need Docks and Expert Fishermen to productively use them.
  • Don't take too much time to get the lay of the land; the faster you settle the better. Remember that it's possible to resettle if you find a significantly better place a couple turns later (you can't disband a colony with a stockade, and the investment in roads/plowings would be lost, but in the early game resettlement is a sensible backup plan).
  • Settle in a place with good access to Europe. Don't waste fleet time, as you don't have much, especially if you aren't playing the Dutch.
  • Avoid other powers. Later you will dominate them economically, but in the early game they're annoying and even a bit dangerous.
  • A single-colonist silver mining colony (called an outpost) may be a good idea, especially if you get an Expert Silver Miner and build a road to the outpost. After the deposit is exhausted you may either load everything from the colony onto ships or wagon trains and disband it, or use the mountain for Ore if other squares are good too.

There are 8 climatic zones (total score in parentheses, only important goods included):

  • Mixed Forest/Plains (++++++):
    • +++ great for Food (5)
    • ++ good for Lumber (6)
    • + acceptable for Fur (3)
  • Conifer Forest/Grassland (+++++):
    • ++ good for Lumber (6) and Tobacco (3)
    • + acceptable for Food (3)
  • Tropical Forest/Savannah (+++++):
    • ++ good for Food (4) and Sugar (3)
    • + acceptable for Lumber (4)
  • Broadleaf Forest/Prairie (++++):
    • ++ good for Cotton (3)
    • + acceptable for Lumber (4) and Food (3)
  • Boreal Forest/Tundra (+++):
    • + acceptable for Lumber (4), Fur (3) and Food (3)
  • Wetland Forest/Marsh (++):
    • + acceptable for Lumber (4), and Food (3)
  • Rain Forest/Swamp (++):
    • + acceptable for Lumber (4), and Food (3)
  • Scrub Forest/Desert (-):
    • - it's bad, except for Oasis

Try settling in area full of Hills, Mountains, Plains/Mixed Forest, Grassland/Conifer Forest, and Savannah/Tropical Forest terrains, with fair areas of Tundra/Boreal Forest and Prairie/Broadleaf Forest perfectly acceptable. Desert/Scrub Forest, Marsh/Wetland Forest and Swamp/Rain Forest are bad.

On the map of America it means South Canada, Eastern/Mid USA, Mexico region, and East/South Brazil, North Argentina, North Chile region. Northern coast of the South America doesn't have enough room for development and is surrounded by huge Rain Forests from every direction. The Caribbean region has good climate, but it's hard to develop on small islands. You get the idea what kind of terrain I'm talking about.