What to shoot and what not to shoot?

I read to go to the nav beacon to kill pirates and stuff but sometimes I get engaged by 3+ ASP's in my sidewinder and it is hard for me to keep track of what to shoot and what not to shoot. I recently came back from a short flight and discovered I had 10K bounty on my head from only shooting reds.

How does this system exactly work? I shoot a wanted guy and suddenly more reds show up that seem to be clean. What do I do in these situations, and how do I know what to shoot and when to actually disengage/flee? Up till now I succeeded in keeping my sidewinder in one piece, soon I can get a viper MK-III and I don't want it to be broken or get a bounty debt I cannot repay.