I had this same problem and none of the solutions above worked for me. I found that I could only trace within the view that I first selected the Start Editing tool. The Trace tool wouldn't work outside that area. Solution To fix this I zoomed so that the entire layer I wanted to trace was completely in view, then I selected Start Editing. It worked fine after that, but I had to do the same thing if I stopped then started editing, which is annoying. Hope this helps.
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