I read somewhere its within 2km of your position. You can be in a boat and have the icon appear on your map inside the fog of war (undiscovered area). When I found it, my friend called it out as he saw it on the main map. I didn't see it on my minimap, so it was that far away.

EDIT: When you're looking for the trader, bring materials for a portal with you (and have a portal at your base on standby)