I’m playing a traveling merchant and just saw the red knight side quest show up. I have never been able to beat that guy!!! Maybe I could if I had the combat skill, but as it stands, I’m not sure that I’m going to be able to do that.
So, it is possible to beat the Red Knight just with strong equipment and skills, but there are some tricks to this fight. As a merchant, you may recruit a companion to fight in your place - though you'll have to learn a thing or two about the Knight first for them to win. If you fight by yourself, there is one very helpful thing. I won't write the full spoiler just yet, but have you noticed that the Red Knight only attacks with an axe - no bow, no magic? There are ways to exploit that!