I focused on introducing phonics rules rather than specific words. As the kids practiced reading, sight words that didn't fit in with phonics rules would come up, and I would explain how the word was pronounced and that it was one of those weird words that you just have to remember. (But even with those words, I like to point out their phonics - e.g "the 'gh' is silent" or "the 'ch' is pronounced like 'k'.") I never had my kids practice reading sight words in isolation, but I did sometimes type or print up my own little cartoons or stories for them to practice with, and I might include repeated examples of a particular sight word I wanted to help a kid remember.
If I were going to take the approach of introducing words in a planned-out way, I'd probably pick a specific story or page for the child to practice reading and introduce the words needed to read that. Once the child was comfortable reading the words in that context, I'd write or find some other practice pages using the same words. Once I was confident the child could recognize the words whenever he saw them in new text, then I'd move on to a different story and the words needed for that one. How many words to introduce and how often to introduce them would depend on how easily and quickly I saw the child learning them. But I personally would definitely not start out teaching reading as sight word recognition.
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