A small one is plenty, until you reach the real big markets. 5.7 has lower religious requirements for the merchant recruitment.
About the trait, monopolist, I am not really sure how your merchant get it, maybe by being the only one in the region trading that resource. Too lazy to look into the char_traits file atm

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But in general, if you are broke your merchants become better automatically, while they tend to become loyal to coin and whatnot if you are too rich.
Good starting positions for flemish merchants is the silver near Frankfurt, the danish amber and then further out more silver, marble and even more amber. I wouldn't goo farther than italy, germany or england/ireland first. So Timbuktu is totally out if you thought about that.