Something I have noticed a lot is traders turning up at the most annoying times. If you are locked down with a siege, you don't want the caravan turning up and dumping their gear where they die.
Small correction: the traders always follow their schedule and arrive every year in the same season. The goblins are the annoying ones, they try to attack when the traders are due to force you to open the gates.
That said, I like the idea of a beacon of warning. I also thought of some sort of lighthouse, like a vantage point with a burning fire, and depending on the color of smoke or maybe the color of panes of glass that can be placed in front of it, it could mean different things.
Like XXSockXX pointed out, most caravans wouldn't see the beacon before they're close to the fortress, so it would be too late to change the escort. I would suggest the following modes:
- No beacon / neutral beacon: trading is safe, come on in.
- Grey smoke or something: we're under attack, stay away. Very few diehard merchants could maybe try to sneak through enemy lines and sell weapons and supplies for massive profits.
- Black smoke / emergency signal: send help. The merchants would leave and deliver that message to the home civilization, and then the ruler would decide, depending on your diplomatic relationship, past profits, strategic value etc. whether or not he'll send troops to support you.
How much of an escort they should bring could be an automatic decision on the merchants' side. Say you put up the attack beacon. In the following year, the merchants might decide to bring a bigger escort. They arrive at your fortress and find fields littered with goblin corpses, troll blood everywhere, and if you trade them blood-stained goblin sized armor and some +jabberer bone earrings+, too; maybe next year the diplomat will offer you an alliance against the goblins. Or they might declare war on you because you've grown too mighty.
On the other hand, if the traders see many destroyed buildings and few dwarfs hauling trade goods because most of them are in the hospital or the corpse stockpile; the traders might increase their escort or stop coming altogether because they don't think that your profits are worth the risk.
But back to the beacons, some cool game mechanics could be connected to them. For example if you use a smoke signal when the elven caravan comes around, they'll be very grumpy next year.
The signal should have an effect on the attackers, too. It has to be exposed to be visible, so it'll be a popular point of attack for flying invaders (not to mention the strategic value). Or if your fortress puts up the emergency signal, it should boost the attackers' morale, and they could rush in to finish you off.