The Burkina Faso international left Sunderland after making 12 appearances during his only season with the Black Cats.
"It's a position we wanted and he's a good player to improve the team, one more option," head coach Cesar Peixoto told the club website.
"He has the right characteristics I want in this position - good one-versus-one, strong, left-footed to score or assist and fast to attack the space.
"He needs time to get fit because he's been working alone, and he needs time to know our idea of the game, but he is another option to help us fight to get to the Premier League.
"Like we saw on Sunday (Wolves' 2-2 draw at Birmingham), the Championship is very tough, so we need two players in each position to manage the games."
Traore began his career at Chelsea, making Premier League and Champions League debuts before loan spells at Vitesse Arnhem and Ajax.
He later spent three seasons at Lyon before joining Villa for £17m, scoring 10 goals in 62 appearances.
The 31-year-old subsequently played for Villarreal before returning to Ajax for a second spell.