Cold reading is about reading the mind of people you are not familiar with or a total stranger.
This skill is especially important for hypnotist in covert hypnosis.
Covert hypnosis is about having conversation with people in a way that he is talking directly to their subconscious mind. For instance in street hypnosis, a hypnotist would approach any street guy and starts a conversation.
He would then use his cold reading skill to find out more about that person. In other words, he asks questions that point him the direction of what the stranger’s thoughts are.
Question like “You like brown colour, right?” – this question is not asked in order to have the right answer but merely to prompt that person to give the right answer. In this case, he would reply either Yes or tells the hypnotist the colour he actually likes. If he says that he likes green, then the hypnotist would focus on something that is green in colour to “suit his taste”, things like grassland.
Of course one question cannot reveal much about the person. More questions have to be asked for the hypnotist to better know about her.
And this is nothing new. We ask question when we want to get to know a certain person.