Parents should regularly observe his/her child reading.
Read with your child as often as possible, at least several evenings a week.
Let your child read to you.

Observe the child in First grade

Is he/she trying, although imperfectly, to link letters with sounds? 
Is he/she matching sounds to letters in each position in a small word (beginning, end, and middle) 
He/she should be recognizing common letter groups [(blends, digraphs, etc.) and patterns (silent e words, adjacent vowels, etc.)].  

Observe the child in Second grade

By second grade the basic tools for reading should be in place. 

Second grade should see the emergence of a child‘s ability to read easy multisyllabic words (such as rabbit, butter,

Be concerned if a second grader is not yet sounding out words, is taking wild stabs at words, is not able to read new or unfamiliar grade-level words, has not yet penetrated the inside of a word when he is reading, cannot decode most single or some easy multisyllabic words, is not building a vocabulary of words that he/she can read fluently, or doesn‘t seem to enjoy reading. 

Excerpt from Overcoming Dyslexia by Sally Shaywitz

Clues to Dyslexia

Once a child begins to speak, look for the following problems:

The Preschool Years

Trouble learning common nursery rhymes such as .Jack and Jill. and .Humpty Dumpty.
A lack of appreciation of rhymes
Mispronounced words: persistent baby talk
Difficulty in learning (and remembering) names of letters
Failure to know the letters in his own name

Kindergarten and First Grade

Failure to understand that words come apart; for example, that batboy can be pulled apart into bat and boy and, later on, that the word bat can be broken down still further and sounded out as = b 
= aaa = t. 

Inability to learn to associate letters with sounds, such as being unable to connect the letter b with the /b/ sound.

Reading errors that show no connection to the sounds of the letters; for example, the word big is read as goat.

The inability to read common one-syllable words or to sound out even the simplest of words, such as mat,  cat,  hop, nap.

Complaints about how hard reading is, or running and hiding when it is time to read.

A history of reading problems in parents or siblings.

Other possible clues of dyslexia

Look for these indications of strengths in high-level thinking processes:
Curiosity
A great imagination
The ability to figure things out
Eager embrace of new ideas
Getting the gist of things
A good understanding of new concepts
Surprising maturity
A large vocabulary for the age group
Enjoyment in solving puzzles
Talent at building models
Excellent comprehension of stories read or told to him 

Clues to Dyslexia From Second Grade On

Problems in Speaking

Mispronunciation of long, unfamiliar, or complicated words; the fracturing of words: leaving out parts of words or confusing the order of the parts of words, for example, aluminum becomes amulium 

Speech that is not fluent: pausing or hesitating often when speaking, lots of um's during speech, no glibness

The use of imprecise language, such as vague references to stuff or things instead of the proper name of an object 

Not being able to find the exact word, such as confusing words that sound alike: saying tornado instead of volcano

Spoken vocabulary that is smaller than listening vocabulary, and hesitation to say aloud words that might be mispronounced, substituting lotion for ocean, or humanity for humidity.

The need for time to summon an oral response or the inability to come up with a verbal response quickly when questioned

Difficulty in remembering isolated pieces of verbal information (rote memory): trouble remembering dates, names, telephone numbers, random lists .

Problems in Reading

Very slow progress in acquiring reading skills
The lack of a strategy to read new words
Trouble reading unknown (new, unfamiliar) words that must be sounded out; making wild stabs or guesses at reading a word; failure to systematically sound out words
The inability to read small function words such as that, an, in
Stumbling on reading multi-syllable words, or the failure to come close to sounding out the full word
Omitting parts of words when reading; the failure to decode parts within a word, as if someone had chewed a hole in the middle of the word, such as conible for convertible
A terrific fear of reading out loud; the avoidance of oral reading
Oral reading filled with substitutions, omissions, and mispronunciations
Oral reading that is choppy and labored, not smooth or fluent
Oral reading that lacks inflection and sounds like the reading of a foreign language
A reliance on context to discern the meaning of what is read
A better ability to understand words in context than to read isolated single words
Disproportionately poor performance on multiple choice tests
The inability to finish tests on time
The substitution of words with the same meaning for words in the text he can‘t pronounce, such as car for automobile.
Disastrous spelling, with words not resembling true spelling (some spellings may be missed by spell check)
Trouble reading mathematics word problems
Reading that is very slow and tiring
Homework that never seems to end, or with parents often recruited as readers
Messy handwriting despite what may be an excellent facility at word processing–nimble fingers
Extreme difficulty learning a foreign language
A lack of enjoyment in reading, and the avoidance of reading books or even a sentence
The avoidance of reading for pleasure, which seems too exhausting
Reading whose accuracy improves over time, though it continues to lack fluency and is laborious
Lowered self-esteem, with pain that is not always visible to others
A history of reading, spelling, and foreign language problems in family members 

In addition to signs of a phonologic weakness, there are signs of strengths in high-level thinking processes: 
 
Excellent thinking skills: conceptualization, reason, imagination, abstraction
Learning that is accomplished best through meaning rather than rote memorization
Ability to get the big picture.
A high level of understanding of what is read to him/her.
The ability to read and to understand at a high level over-learned (that is, highly practiced) words in a special area of interest; for example, if his hobby is restoring cars, he may be able to read auto mechanics magazines.
Improvement as an area of interest becomes more specialized and focused when he develops a miniature vocabulary that he can read
A surprisingly sophisticated listening vocabulary
Excellence in areas not dependent on reading, such as math, computers, and visual arts, or excellence in more conceptual (versus factoid-driven) subjects such as philosophy, biology, social studies, neuroscience, and creative writing. 

If you think your child/student has some of the above problems, it is important to note how frequent they are and how many there are. 
You don‘t need to worry about isolated clues or clues that appear very rarely.
For you to be concerned, the symptoms must be persistent; anyone can mispronounce a word now and then, or confuse similar-sounding words occasionally. 
What you are looking for is a persistent pattern: the occurrence of a number of these symptoms over a prolonged period of time.

PS: Here are more Clues to Dyslexia

More Lessons To Go