Your trade power in a node is a combation of :
1. Provincial trade power. This is trade power added by provinces, which is boosted by province buildings and mercantalism.
2. Ship trade power. This is trade power added by light ships protecting the node.
3. Streaming trade power. This is trade power added by the influence of your trade power in other, connected nodes. The most complex type.
Provincial trade power is most useful in:
-Your home node
-Trade company regions. When you control 50%+ (iirc) provincial trade power in a trade company region where the provinces have been given to that trade company, you get the regional bonus (+1 merchant etc.). These regions are in Africa, India, and southeast Asia
It's most useful on a nation that's going to selectively acquire provinces, rather than conquer everything outright. The provinces you want to acquire are ones with trade power bonuses, such as Sounds and river deltas.