The circular portion denotes the chances that you'll get a random encounter. Blue = all-clear, Geen = caution, Red = Prepare yourself. Note it's not a sure thing, you can get encounters even with Blue radar.
The second aspect (which doesn't come into play just yet, since you're just starting) is there'll be a bar that pops up to tell you when you're within three paces of an FOE.
You'll first need the skill, of course, then you'll need to be standing at the requisite gathering spot, which is shown ingame by sparkles above the ground. You'll find these spots all over the Labyrinth, Most people create a Survivalist team (can learn all three gathering skills) just to grab stuff to sell off.
Well, you'll want to leave notes and everything for yourself so you can find stuff easier again - like the aforementioned gathering points.