By default, it is not allowed to trace everything done by an application. To be able to trace SQL statements and parameter values the application being traced must allow this. This is done with the AllowedTraceLevel connection string option.
The connection string options Database, User ID, and Application Name can be used to filter the trace output. One or many Databases, User IDs, and Application Names can be specified in the configuration file under the <filters>-tag. By doing that, trace will only be enabled for the connections with the specified database(s), user ID(s), and/or application name(s).