When you first activate this card (flip it face-up) you do not have to activate its effect. You cannot flip this card and activate its effect in the same chain. (See “Chains, Activation, and Resolution” in the Advanced FAQ.)
If “The Dragon’s Bead” is already face-up on the field, you may activate it multiple times in the same chain, but you must discard 1 card from you hand as a cost for each activation.
You cannot activate the effect of “The Dragon’s Bead” during the Damage Step.
You cannot activate the effect of “The Dragon’s Bead” to negate a Trap Card that has already resolved, such as a “Nightmare Wheel” the opponent activated on a previous turn.
You can only activate the effect of this card to negate a Trap Card that targets a face-up Dragon-Type monster, so it cannot negate “Mirror Force”, “Waboku”, “Torrential Tribute”, “Bottomless Trap Hole”, etc.
Netrep Rulings:
“The Dragon’s Bead” must already be active to negate a Trap targeting a Dragon-Type.