Cold reading is a great skill to have. It can be fun at social situations. It can allow you to more easily blend into social situations. And it can even get you free drinks at the bar. It's all in how you use it, and knowing when, where, and how to apply it to the situation.
What is Cold Reading?
Cold reading is a combination of skills, tricks, and techniques combined to give the illusion of clairvoyance. Basically convincing others you have psychic powers. The same tricks and methods have been used since before recorded history to entertain, and to fool others.
In it's purest form, cold reading is just about asking the right questions of a subject, and reading their responses, body language, and other clues. Combined with a little knowledge, and skill, the reader can then guess at the subjects feelings, and convince the subject that the reader had access to information about the subject through supernatural means.
If the reader is an "honest" performer, they will admit that they are performing tricks. They may wait to the end of there performance, but they will usually tell you.
If the reader is "less honest", they may only tell you that they are psychic.
Both psychics and cold readers use the same techniques.
Why learn about Cold Reading?
There are two main reasons I recommend everyone learn about cold reading, for fun, and for protection.
There are con artists, scammers, and deluded people out there who will take advantage of anyone that will believe they have psychic powers. Some are deliberate con artists, and some are truly convinced they have a "gift." Knowing how these tricks (and they are just tricks) work can protect you & those around you from some unfortunate situations.
The second reason is that it's fun. Performing a few quick tricks of mentalism can be fun at social situations, and may even get you a free drink or two on a night out.
A third reason is that understanding, and being able to read people is a skill that can help you in all aspects of social interaction. Even if you are not performing, the ability to gauge people's feelings and reactions quickly can help in anything from socializing, to job interviews, to personal relationships.
Let's be clear here, there is no supernatural basis for cold reading, or psychic claims. Every test that has been performed under controlled circumstances has failed, often quite impressively. If anyone tells you they are psychic, they are fooling you, and maybe even themselves. Don't give them anything, and don't base any important decisions on the advice of psychics.