I always start my kids right around their second birthday, when I start to see these "signs":
- ability to pull pants up/down
- verbal or signing skills to indicate need for the bathroom
- can stay dry for approximately 2 hours
- shows an interest in the toilet
I explain to the child what it is used for, then off she goes sans pants/underpants. I closely observe her during this time and when I see a sign that she needs to go ("potty dance", talking/moving very quickly), I ask her to sit. We try and try again until she is finally successful. When she is successful she gets a big smile from mama, and I tell her to pat herself on the back. That's it. No cupcakes, no balloons, no parade. Because when you bribe with rewards, you'll have to keep outdoing yourself when the child gets tired of said bribe. I know bribes/rewards are easy and instantly effective, but they only work for the short term and they're doing nothing to strengthen your child's self-esteem. Each time the child uses the potty chair, I use similar objective praise ("You must be so proud." "I see you used the toilet!" "Thank you for remembering to use your seat!") The child simply wants you to notice her accomplishments.
After about a week of this, we move the potty chair into the bathroom. I explain to the child that it's the same chair, but we're going to keep it in the bathroom now. We now use the same procedure for another week with the chair in the bathroom. Typically, at some point during this week, the child wants to use the "big" toilet. That's great, we go right to the toilet and if we're successful, away goes the potty chair. We use this lid from Home Depot that attaches right to your toilet. It usually takes another few days to get used to the toilet and then we introduce underwear. Pulling down the underpants takes the child a few extra seconds, so there may be an accident or two during this transition. These underpants from Target have a thick lining and are just fantastic. They're durable and go right into the wash (over and over again). It will take practice, but let your child pull them up and down herself. If you need to travel during this time, use a pull-up. Pull-ups should not be used excessively because they're very confusing for the child (Am I or am I not allowed to pee in my pants?). Only if you absolutely have to take them out of the house during this time.
If you've waited too long (age 3 1/2) it's going to be much, much harder to break the child of the diaper habit. The only reason you should wait this long is if the doctor says your child is physically not ready to start.
So, it's been three weeks and my youngest is completely #1 trained, but still working on #2. I'm by no means a toileting expert, but I've been through it enough times that maybe I can offer a humble word of advice. If you have toileting questions, don't hesitate to leave a comment. Good luck!