Dynamic program optimization is increasingly important for achieving good runtime performance. A key issue is how to select which code to optimize. One approach is to dynamically detect traces, long sequences of instructions spanning multiple methods, which are likely to execute to completion. Traces are easy to optimize and have been shown to be a good unit for optimization. This paper reports on a new approach for dynamically detecting, creating and storing traces in a Java virtual machine. We first describe four important criteria for a successful trace strategy:good instruction stream coverage, low dispatch rate, cache stability, and optimizability of traces. We then present our approach based on branch correlation graphs. A branch correlation graph stores information about the correlation between pairs of branches, as well as additional state information. We present the complete design for an efficient implementation of the system, including a detailed discussion of the trace cache and profiling mechanisms. We have implemented an experimental framework to measure the traces generated by our approach in a direct-threaded Java VM (SableVM) and we present experimental results to show that the traces we generate meet the design criteria.