I'm not sure what triggers the trader. My last play through (I think it was BSM 1.01) I didn't see him until pretty late, CGL 10 or so. This time I ran into him at CGL 3, so it might just be random with a large variance.
I did notice this time that I ran into him near the Palinero/Algeria border, but I'm not sure if that's a trigger or just luck.
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