Thanks every one. Our DD just turned 4 a couple weeks ago. She has been sounding out signs and single words for a long time. The earliest I can think of was when she was 2 we took her to a life sized maze and when she would get to a dead end she would read the sign. They said things like turn around or go back.
Once at a friends house she read a childrens book I know she had never seen at 3. She can spell and sound out pretty much any words we give her even the ones with what she calls trick letters. She makes pictures and writes sentences on them. I have given her lists of words to read and she got them all over 100 words she gets them pretty quick too like a second or two per word.
I have asked her to read board books before and she just says no you read it. Then recently she asked for a magic tree house book at the library and she read a whole page of it on her own. Then she told me to read it because I was faster and she could see the pictures in her head better when I read. She understands the story and is retaining the information, I have read four this week, which is not enough for her. She will read a page or two when I get busy, but as soon as I come back she has no interest in reading it herself.
I think she can read but I don't know how much or how to encourage her to get to that next step of reading on her own. She is like a sponge and is constantly wanting me to feed her information. I have two other very small children so if she would read on her own it would be a whole new world. Any ideas?