I never talked about stranger danger with my kids. When kids are 4-5, they don't know who a stranger is anyway. There are all sorts of studies to show that children will willingly go off with sympathetic strangers under the right circumstances. And most molestation is done by someone the child knows. In that way, I think that 'stranger danger' can actually lead parents to a false sense of security. I too like the approach in "Protecting the Gift".
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Instead of talking about stranger danger, I've tried to foster my children's ability to say 'no' or to not respond, especially to unwanted contact. One very firm absolute rule is that if you're playing (wrestling, tickling, hugging) and someone says "no", then the touching stops immediately. In fact, I chastised dd for that just yesterday. She was sitting on her brother, and for a while, he was OK with it. Then he wanted it to stop and she wasn't getting off. "When he says "no, get off" YOU GET OFF."
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I've never required my children to say hello to strangers or to talk to people they don't know very well. If someone talks to them and they're not comfortable answering, that's OK. We also stress that if someone does something that makes you uncomfortable or upset, that you should talk to mom and dad about it.
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Finally, we talk about appropriate touches -- your private parts are private. No one should touch them unless it's your mom and dad helping you get clean/checking for injury or a doctor checking to make sure they're OK, with mom and dad standing right there. Your private parts are the areas that a swimsuit covers.
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For the OP, I think the real probably was not 'stranger danger' but that she was being socially inappropriate. We don't hug people we don't know in our culture. I would teach your dd two things (1) that she needs to stay where she can see mom (because if she can see you, you can see her) and (2) she needs to ask whether it's OK to hug or touch someone. Explain that some people don't like to be hugged/jumped on and that she is making people uncomfortable. She needs to stay near me because at age 4, it's my job to keep her safe. Period. I'm much more worried now that ds is 9 because he's at a prime age for molestation. 9 year olds have more freedom. They spend time in other people's houses without their parents.