Here is a nice article about fishing in Steinhatchee by Florida Sportsman Magazine.

Reds are the main players for sight-fishing fly fishers.

By Tommy Thompson

The author depends on Clouser Minnows for both trout and reds.

The first time I fished Steinhatchee, I knew immediately that its shallows stood apart from those I’d sampled elsewhere.

From the mouth of the Steinhatchee River south to the Pepperfish Keys, big, upended rocks litter porous limestone bottom. Oyster and shell bars are not as common as they are to the south, from Horseshoe Beach to the Suwannee River. Continuous grassflats extend for more than a mile offshore.

If you sight fish with a fly rod, you can certainly do it on this unique stretch of Florida’s Gulf coast. The jagged, marshy shoreline is scrubbed clean by good tidal flow and protected by distance from the muddy outflow of the Suwannee.

From the mouth of Steinhatchee River, the shoreline of Deadman Bay begins a westward swing toward Rock Point and Dallus Creek. This is a natural catch basin for baitfish, redfish and surprisingly big seatrout. The town has become an angler-friendly destination within the last few years.

The Steinhatchee River channel is well-marked. To clear the extreme shallows on either side, you’ll have to run out quite a ways to hang a left and head south to the best flats. If you have a shallow-draft skiff, with a moderate tide and calm winds, you can easily run due south from marker No. 9, but on the lowest tides you’ll need to run as far out as No. 5 before you make your turn. And once you do, you find yourself nearly two miles off the coast, but don’t worry—the shallows you’re heading to extend several miles into the Gulf of Mexico in places, so don’t make the big mistake of swinging back to shore at full tilt.