A good psychic uses a series of techniques called "cold reading". Basically they will get certain clues from how you look or sound. They will usually start with very broad statements (called a Barnum statement) that apply to pretty much everyone in the hopes that you will unwittingly provide them with more detailed information in your response that the can hone in on.

For example, they might start by saying "I sense that soon you are going to be making a big decision in your life" or "I sense you are experiencing difficulty with a personal relationship" at any given point, most people are going to be making a decision at some point in the future or a relationship that isn't perfect. "Soon" "big" and "difficulty" are relative terms and the subjects inclination is to fill in the definition of these terms as they are appropriate. If the subject says something like "well I have been thinking about moving", "I have been thinking about quitting my job", "I have been thinking about quitting smoking", "I have always had a difficult relationship with my father" etc. that gives the reader something to focus on.  

The statements will get more specific as your responses provide the reader more information. It is very easy for the subject to forget what he/she has told the reader so when the reader basically rephrases what the subject has already stated combined with safe assumptions there is a "wow" factor. If the subject is not providing enough information with their answers, the reader will be forced to guess. This is where a great amount of skill is required to do it well or risk looking like the complete fraud they are. Readers will often leave longer than natural pauses in their statements to read the subjects physical reaction to what they are saying. By picking up on physical cues a good reader can change their statement halfway through if they think they are wrong or double down if they are getting a positive reaction.

Errors can be covered several ways depending on the specific circumstance. Statements can be twisted, added on to or simply moved past. For example, with the personal relationship route the reader might say "I'm sensing you are having difficulty in a relationship with a female maybe a girlfriend..." and based on your reaction either commit or continue "or your mother..." until they find a positive hit.

Another technique is to use a shotgun approach and fire out a lot of completely unrelated options really fast. The subject will pick up on the one relevant to them and comment on it, allowing the reader to focus in while all of the other quickly thrown out options are forgotten. For example, the reader might say "I sense you are having trouble with your relationship with a family member like your mother, father, brother or sister...." if no positive response "or extended family like a cousin, aunt, uncle" then proceed to focus on the troubled relationship with the uncle while the six complete misses are forgotten. How did the reader know about the trouble with your uncle? You told them then forgot you were the one who said it because it happened so fast.  

That being said, seeing someone who is really good at cold reading can certainly be entertaining because when done well the illusion can be very impressive. But that's what it is, an illusion. When you go see Criss Angel you know he isn't really flying, that doesn't take away from the entertainment value. 

                                            Debunking frauds can be a fun hobby and a service to your community.  Beyon Saving is absolutely right, so  study up on the subject.  Simply google  Youtube  Cold Reading, then go with a mini tape recorder, after study yu'll know what to listen for. Maybe you can get a local media outlet to do a story on the fraud.                        Famous Director/actor Orson Welles had a great take on what cold reading was, it's only 3.+ minutes and well worth the view;                              http://www.youtube.com/watch?v=IjPsnfysrp8 

This fortune teller I briefly spoke with via e-mail knew I was an Athiest who lost his faith. I never told her that. I'm impressed. Granted, she could have googled searched my username, which is the same one I use everywhere, and came across one of my posts here. When I told my father about the fortune teller I saw five years ago in Vegas, he recommended I watch "Leap of Faith". So I did, and I understood what he meant. These con-artist types look at your clothing and for other hints, ask a random question, or make a random statement, and we fill in the rest.