diff --git a/readme.md b/readme.md
index 00e169e20..bfeaf5ce5 100644
--- a/readme.md
+++ b/readme.md
@@ -33,6 +33,49 @@ Installing
 
 5. Enjoy!
 
+The Prompt
+----------
+
+PowerShell generates its prompt by executing a `prompt` function, if one exists. posh-git defines such a function in `profile.example.ps1` that outputs the current working directory followed by an abbreviated `git status`:
+
+    C:\Users\Keith [master]>
+
+By default, the status summary has the following format:
+
+    [{HEAD-name} +A ~B -C !D | +E ~F -G !H]
+
+* `{HEAD-name}` is the current branch, or the SHA of a detached HEAD
+ * Cyan means the branch matches its remote
+ * Green means the branch is ahead of its remote (green light to push)
+ * Red means the branch is behind its remote
+* ABCD represent the index; EFGH represent the working directory
+ * `+` = Added files
+ * `~` = Modified files
+ * `-` = Removed files
+ * `!` = Conflicted files
+ * As in `git status`, index status is dark red and working directory status is dark green
+
+For example, a status of `[master +0 ~2 -1 | +1 ~1 -0]` corresponds to the following `git status`:
+
+    # On branch master
+    #
+    # Changes to be committed:
+    #   (use "git reset HEAD <file>..." to unstage)
+    #
+    #        modified:   this-changed.txt
+    #        modified:   this-too.txt
+    #        deleted:    gone.ps1
+    #
+    # Changed but not updated:
+    #   (use "git add <file>..." to update what will be committed)
+    #   (use "git checkout -- <file>..." to discard changes in working directory)
+    #
+    #        modified:   not-staged.ps1
+    #
+    # Untracked files:
+    #   (use "git add <file>..." to include in what will be committed)
+    #
+    #        new.file
 
 ### Based on work by: