The Behavior Adjustment Training (BAT) method by Grisha Stewart of Ahimsa Dog Training, is a great way to help your dog to be more comfortable with what she is fearful or upset about.
BAT uses desensitization together with a functional reward for calm behavior. Simply put, you begin at a distance where your dog can see what she is afraid of without reacting to it and when your dog shows calm body language, you move away from what she is afraid of as the reward. (You can also add a "bonus" reward of a treat or toy).
What is unique about BAT is the use of the "functional reward". You can think of the functional reward as what your dog wants to happen in that moment. In the case of a fearful dog, what the dog wants is generally for the scary thing to be farther away. A good functional reward for your dog's calm behavior in the face of what she is afraid of can be retreating farther away from it. If you can teach your dog that calmness will make what scares her get farther away, you've empowered your dog while solving lots of misbehavior problems that come along with anxiety such as barking and aggression.
While training using BAT, it pays to be careful about how you desensitize and how you read your dog's body language. When desensitizing your dog, the most challenging aspect will be controlling the environment so that your dog doesn't end up "over threshold", causing her to bark, lunge, etc. If you are working on teaching your dog that it is okay when dogs pass by and you consistently get too close and your dog ends up barking, you will most likely be exacerbating the problem instead of solving it. What you want is to be close enough so that your dog notices the stimulus and is maybe a bit concerned about it, but not enough for her to react fearfully.
It really helps in the training process to have someone helping you so that you can have control over the stimulus, but sometimes you can also get exposure to your dog's scary thing by "stalking" a dog walking trail or other predictable place where people pass by as long as you have enough space to "escape".
If your dog does end up barking or upset and you cannot wait for a moment of relative calmness before retreating, it is best to get away from the stimulus as quickly as you can and start over with a greater distance or lesser intensity.
It takes a bit of practice to read your dog's body language for calmness in order to know when to reward by retreating. A great side effect of learning this skill however, is a better understanding of your dog. What you are looking for before retreating is (from Grisha): "blinking, jaw loosening (being able to pant again), looking away, turning away, ground sniffing, air sniffing, tail carriage getting looser, friendly approach."
In summary, BAT can be an effective and gentle way to teach a dog to be calm about what he or she is scared of and is also a way to help relieve your dog's discomfort instead of masking (or increasing) it using corrections. How long it takes for you to see progress will vary greatly, but many people report results pretty quickly, especially when compared to other methods.
Are you interested in trying out BAT with your dog? Here are some resources:
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