For many people, belief in the paranormal derives from personal experience of face-to-face interviews with astrologers, palm readers, aura and Tarot readers, and spirit mediums. These encounters typically involve cold reading, a process in which a reader makes calculated guesses about a client's background and problems and, depending on the reaction, elaborates a reading which seems to the client so uniquely appropriate that it carries with it the illusion of having been produced by paranormal means. The cold reading process is shown to depend initially on the Barnum effect, the tendency for people to embrace generalized personality descriptions as idiosyncratically their own. Psychological research into the Barnum effect is critically reviewed, and uses of the effect by a professional magician are described. This is followed by detailed analysis of the cold reading performances of a spirit medium. Future research should investigate the degree to which cold readers may have convinced themselves that they actually possess psychic or paranormal abilities.