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At this stage, children make meaning when reading by relating new information to what they already know. For instance, when reading an informational book about sharks, a child may try to picture the sharks he's seen in books and in the aquarium to help him understand a new piece of information -- that sharks actually have two sets of teeth. Children who have been read to a lot and who have had many opportunities to discuss ideas with their parents usually have a lot of knowledge about many topics. This background knowledge helps them to understand what they read.
Your second or third grader still uses "decoding" skills to sound out some words. Most children at this age recognize many words by sight, and this helps them be fluent readers. At the same time, all second and third graders still need to have the "decoding" skills necessary for sounding out the long, unfamiliar words they encounter in books. They also use these decoding skills to help them spell words.
Most second and third graders are becoming smoother, more efficient, more fluent readers. They begin to read faster, to read in meaningful phrases as opposed to word-by-word, and to read with greater expression. Their reading begins to resemble normal speech. Becoming a fluent reader is important because fluent readers tend to read more on their own and tend to understand more of what they read.
Reading a lot independently helps your second or third grader become fluent. When they read on their own, children not only increase their reading fluency, but they learn new vocabulary words, learn about different ways of telling stories and presenting information, and gain exposure to new concepts and information.
Readers and writers develop different strategies for reading fiction and nonfiction. Second and third graders learn that nonfiction text has a different structure from fiction. Nonfiction is also often more difficult to comprehend because it presents so many new facts and ideas. To help them understand nonfiction text, children learn specific strategies in school such as previewing the table of contents, the chapter headings, and the words in bold letters. They also learn to slow their reading pace if they need to and to read the captions below pictures in the text to help them.
There is a wide range of reading levels in second and third grade. Even among children who are not experiencing difficulty in reading, there is a wide range of reading abilities at this age. Some children will read books typical of their age, while others will be able to read books above their grade level. Children who are still struggling to read fluently in third grade may need extra help or some testing to pinpoint the source of the difficulty.