The idea is to buy trade goods at a low price where there's a lot of that type of good, then travel to where there aren't many of that good and sell them at a high price. Remember that some areas of Calradia will have a surplus of a given item, while others will have a shortage of the same item. In the article Trade Goods & Food Items you can read more about different qualities and their effects in the game.
So in the same town you may find cheap grain or masterwork tools that can have a large impact on the pricing of this good. Floris Mod Pack introduces the concept of different qualities of trade goods. Basically, anything naturally available at a Goods Merchant or for sale in a village is a trade good. Tradable goods are any item you can buy and sell at a profit in Warband. Trading can be a lucrative process within Mount & Blade. In the lands of Calradia, creating a fortune for yourself can be accomplished in many different ways, each with its own advantages, disadvantages and difficulty. You can help Floris Wiki by expanding it.The following list of items would be useful.