diff --git a/docs/tracing.txt b/docs/tracing.txt
index f351998a4e..e14bb6dccc 100644
--- a/docs/tracing.txt
+++ b/docs/tracing.txt
@@ -27,18 +27,44 @@ for debugging, profiling, and observing execution.
 
 == Trace events ==
 
+=== Sub-directory setup ===
+
 Each directory in the source tree can declare a set of static trace events
-in a "trace-events" file. Each trace event declaration names the event, its
-arguments, and the format string which can be used for pretty-printing:
+in a local "trace-events" file. All directories which contain "trace-events"
+files must be listed in the "trace-events-subdirs" make variable in the top
+level Makefile.objs. During build, the "trace-events" file in each listed
+subdirectory will be processed by the "tracetool" script to generate code for
+the trace events.
 
-    qemu_vmalloc(size_t size, void *ptr) "size %zu ptr %p"
-    qemu_vfree(void *ptr) "ptr %p"
+The individual "trace-events" files are merged into a "trace-events-all" file,
+which is also installed into "/usr/share/qemu" with the name "trace-events".
+This merged file is to be used by the "simpletrace.py" script to later analyse
+traces in the simpletrace data format.
 
-All "trace-events" files must be listed in the "trace-event-y" make variable
-in the top level Makefile.objs. During build the individual files are combined
-to create a "trace-events-all" file, which is processed by the "tracetool"
-script during build to generate code for the trace events. The
-"trace-events-all" file is also installed into "/usr/share/qemu".
+In the sub-directory the following files will be automatically generated
+
+ - trace.c - the trace event state declarations
+ - trace.h - the trace event enums and probe functions
+ - trace-dtrace.h - DTrace event probe specification
+ - trace-dtrace.dtrace - DTrace event probe helper declaration
+ - trace-dtrace.o - binary DTrace provider (generated by dtrace)
+ - trace-ust.h - UST event probe helper declarations
+
+Source files in the sub-directory should #include the local 'trace.h' file,
+without any sub-directory path prefix. eg io/channel-buffer.c would do
+
+  #include "trace.h"
+
+To access the 'io/trace.h' file. While it is possible to include a trace.h
+file from outside a source files' own sub-directory, this is discouraged in
+general. It is strongly preferred that all events be declared directly in
+the sub-directory that uses them. The only exception is where there are some
+shared trace events defined in the top level directory trace-events file.
+The top level directory generates trace files with a filename prefix of
+"trace-root" instead of just "trace". This is to avoid ambiguity between
+a trace.h in the current directory, vs the top level directory.
+
+=== Using trace events ===
 
 Trace events are invoked directly from source code like this:
 
@@ -83,6 +109,13 @@ Format strings should reflect the types defined in the trace event.  Take
 special care to use PRId64 and PRIu64 for int64_t and uint64_t types,
 respectively.  This ensures portability between 32- and 64-bit platforms.
 
+Each event declaration will start with the event name, then its arguments,
+finally a format string for pretty-printing. For example:
+
+    qemu_vmalloc(size_t size, void *ptr) "size %zu ptr %p"
+    qemu_vfree(void *ptr) "ptr %p"
+
+
 === Hints for adding new trace events ===
 
 1. Trace state changes in the code.  Interesting points in the code usually