I get a lot of questions and emails about teaching sight words. I am a strong believer in teaching both sight words AND phonics. In fact, both of these components make up my Ready2Read program. When I first started teaching Audrey to read, we read a lot of easy readers. She would sit on my lap and read to me. When she came across a word that was a sight word, I would do 1 of 2 things:
1) If the sight word is decodable, I would let her try to phonetically decode the word and then remind her that it is a sight word. For example, the word can is phonetically decodable, but it is also a sight word since it appears so often in what we read.
2) If she came across a word that was a sight word, but tried to sound out a word that was not phonetically decodable (at least with early phonics rules) , I used my finger to circle the word.
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