Trace drops are a specialised form of dropping that players of rank 15 and above can perform.
When you start a device dropping in trace mode (radio button choice when you start the drop) you are setting that device aside to listen on a channel not for signals (as a normal drop does) but for other players starting a crack of events on that channel.
When another player starts a crack of an event on the channel your device is trace dropping there is a chance that it will be detected by your device. This will reveal to you (in a mail sent to you) all of the signals of that event known to the player controlling the cracking device.
The chance of detecting a player starting a crack on an event depends on how many devices that player already has cracking events on the same channel. The chance is 10% if the player is cracking with only one device, 50% if two devices and then rises by 10% for each additional device they are using to crack events on the same channel.
For this reason you should be careful to limit the number of devices you use to crack an event (or multiple events on the same channel concurrently).
If your trace dropping device detects a signal in this way, it also has a chance of detecting the device that is cracking the event. The chance is 0% if they are cracking with one device, 20% if cracking with two devices and then rises by 10% for each additional device they are using to crack events on the same channel.
These percentages are cumulative. Only trace dropping devices that successfully detect a signal go on to have a chance to detect the cracking device.