On a related note, after a show a couple of weeks ago, a child sidled up to me grinning from ear to ear:

"I know how you do all of your magic!"

"You do?"

She merely smiled and nodded her head.

I leaned forward and whispered conspiratorially "Don't tell anyone."

I know that I saw Penn and Teller on some talk show (I think it was the Today Show, but I don't remember). They did some card magic, the hosts were amused, and they asked "Will you tell us how that's done?" Penn did a good job of using humor to diffuse the situation by exclaiming fairly enthusiastically "Absolutely I will! How much cash do you have on you?"

I tend to give an implausible explanation, such as "Did you see me handle the cards by the edges? I wiped them all down before the trick and knew which one was yours by spotting the fingerprints." This actually works more often than not, and provides the additional benefit of allowing you to picture the poor sap trying it at home.

But when really pressed by someone who won't let it go, I tell him that my grandfather taught me the trick and made me promise never to give the secret away. Since I'm obviously, visibly too old to have any surviving grandparents, the answer I usually get is "He'll never know." I reply with "But I will. Sorry, but the answer is no." That always ends the conversation. If you can get away with the humorous approaches elsewhere in this thread, more power to you, but they don't tend to work for me.

I used to telle jokes such as "
- can you tell me how it is done ?
- do you know how to keep a secret ?
- yes
- so do I "

But I do not do it any more because some people are asking by frustration and some other by a real interest in magic. What counts is to make the distinction
Now I explain that I agree to give the secret if the person asks me again in two week. And if it happens (very rarely) I give references.

It depends on with whom I am; with some kids, sometimes I explain very very simple effects and conclude that this is already a first magic lesson and for more advanced effects they will need to find a good teacher and that only he will tell you the magic secrets as one is not allowed to expose them to the public.

For other people I pretend sometimes to explain a trick,which eventually goes completely wrong when they interact with the cards but ends with another climax which seems magical.

My WIFE is about the only one I let IN as she watches me PRACTICE and you need someone you can TRUST when attemopting a new trick. My friends will drive me nuts and I have learned to say "Can't you just enjoy it" and I will show you more.