I got pickpocketed on the first night, on the Madrid Metro. We were headed to dinner, and I was oblivious to what was really going on. It put a damper on the entire trip. Don't bring a purse. If you do, wear it under your jacket and always keep your hands on it. Wear a money belt if possible. Consider that there are several people on the Metro trying to get your money at all times. It's not a good or safe feeling. Don't carry much cash and make sure you have the phone numbers of your credit card companies. Luckily I had left my miscellaneous wallet-fillings at home including store credit cards, store club cards, library cards, business cards, etc. All they took were my bank cards, credit cards, and license... all relatively easy to cancel and/or replace. If you have a lot of cash, break it up so it is not all in one place. Try to to speak too much English, as that immediately identifies you as a target. Look at people with suspicion. give them your best stink-eye if you get a bad feeling. Don't keep things in your exterior pockets. Watch out for your friends if you are traveling with other people. Vocalize your concerns. The Spanish word for thief is "ladron" (or "ladrona" for a female... yes, they exist). Yell it out if you must! Stare directly at the bad guys so they know you know what they are up to. Don't let your guard down. It totally sucks that you have to act in this way to avoid getting robbed. Also, if you decide to take cabs instead of the Metro, some drivers will try to swindle you. Walk as much as you can and always be aware of your surroundings.
Some links:
http://www.travelinginspain.com/safety.html
http://www.virtualtourist.com/travel/Europe/Spain/Catalunya/Barcelona-274654/Warnings_or_Dangers-Barcelona-Pickpockets-BR-1.html
http://www.gonomad.com/destinations/0307/pickpocketsspain.html
http://www.lonelyplanet.com/thorntree/thread.jspa?threadID=1360280
http://www.frommers.com/community/forum.cfm/europe/spain/pickpocketing-madrid-bad-really
http://www.notesfromspain.com/2009/11/02/avoiding-pickpocketing-mugging-in-madrid-link/
http://www.abroadview.org/europe/valdemoro.htm
http://www.fodors.com/community/europe/spain-safety-and-pickpocketing-a-query.cfm
http://www.corporatetravelsafety.com/safety-tips/new-pickpocket-technique-in-baracelona-the-ronaldinho-method
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In reference to being pick pocketed as a warning to those friendly individuals that like to make eye contact with every willing male hehe he may not actually be flirting with you...he may just be thinking "money." Yes it's sad but keep your guard up and not to say forget all chances of meeting the perfect Spaniard haha , but be mindful Madrid is "the capitol of purse robbery," and those aren't my words.
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