The performer borrows a coin from someone. Ideally it'll be a silver dollar, but very few people carry them these days, so it may be necessary to have a few from which someone can select one to work with. The person marks it in some way — a felt marker may be needed. The performer has his assistant hold the coin between thumb and forefinger by its edge, under a cloth, over a glass of water, and on command drop it into the glass. The audience will hear the clink as the coin hits the glass, but when the cloth is removed, the marked coin isn't in the glass at all but in the spectator's pocket!
The figure shows the correct procedure for the assistant to hold the coin and the glass of water. The trick here is that the performer has concealed in his hand a glass disk which has the same dimensions as the coin; he palms the real coin and passes the glass disk over to the assistant. Once the glass disk has been dropped into the water it will be invisible. The glass has the same diameter and shape at its bottom as the glass disk, and it will be found that the disk will stay put even if the glass is turned upside down.
Obviously the glass disk has to be edge-on to the audience when passed to the assistant or else the trick is given away instantly.
The description of the trick, as given here, calls for the coin to be given to an assistant and concealed before being dropped into the glass: it would be far more effective to do without the cloth. The assistant can quite naturally hold his arm in front of the glass to cover the actual dropping; careful handling should be sufficient for the rest.
To get the real coin into the spectator's pocket, a little diversion has to be enacted: perhaps the performer can take the spectator by the arm and urge him aside a little "so that the view of the audience isn't blocked". In any event, the performer must somehow get close enough to the spectator to be able to slip the real coin into his pocket.