From what my parents are telling me, my (one year) older sister was reading at the age of 4, and I was reading at the age of 3. Their technique was to read the books to the children with them sitting on the lap, so that they can see the text. One should also read the same books repeatedly, so that the kids are familiar with the text, and can match the words they remember with symbols in a book. They must also actually like the stories, so that they're not bored with the exercise.

My three younger sisters didn't learn to read so early, but it seems the reason was each additional kid reduced time the parents could spend per kid.