The brakes work using a spring loaded damper in the hitch which applies the brakes when the hitch is compressed, e.g when you apply the brakes in the car and the trailer pushes up against it due to momentum. It's not the best system in the world but it's certainly the most fool proof - providing they are well maintained they will just 'work' when towed by any vehicle and without any other action. The red cable as mentioned is the breakaway cable, this *MUST* be clipped to a suitable point on the tow vehicle, normally there is a small bracket or loop located near the towbar. In the worst case scenario, you can just loop it around the towbar and clip it to itself. The purpose is that if the coupling fails, the breakaway cable is snagged and applies the handbrake on the trailer before snapping itself, so your trailer will come to a halt as soon as possible rather than running away on the road.