Teach Relaxation

If your child becomes so competitive that she feels anxious or angry, encourage her to use relaxation techniques to reduce her stress level. According to a KidsHealth article, teach your child to relax by taking deep breaths, tensing and releasing different muscle groups in her body or visualizing herself in a tranquil setting. If your child continues to feel pressure while playing a sport, for instance, suggest she spend more time on a less stressful activity such as riding bikes with friends or taking an art or dance class.

Encourage a Positive Outlook

Competing against other children to get the best grades or fastest times might heighten the anxiety your child feels about school or extracurricular activities. To reduce this stress, a 2008 article in “Family Circle” magazine recommends telling your child to focus on improving his own performance rather than worrying about beating other children. Tell your child to work toward a higher grade on his next math test instead of trying to top the smartest child in the class or worrying about getting a perfect score, for instance. KidsHealth also recommends teaching your child to view setbacks as a learning experience rather than dwelling on them in a negative way.

Discuss Role Models

Use role models as examples of good and bad sportsmanship. An article at Education.com, recommends pointing out how bitter rivalries between athletes, celebrities or even politicians have resulted in damaged reputations or ruined careers. Conversely, illustrating the way a superstar athlete graciously handles defeat -- such as NBA players Karl Malone and John Stockton who made the playoffs 18 times, but never won a title, or Olympic ice skater Michelle Kwan who was favored to win a gold medal in 1998 and 2002, but received the silver medal both times -- can show your child the way to move on after a loss and overcome setbacks.

Watch Your Behavior

Ensure that you're not encouraging your child to be overly competitive with your own actions. If your child puts pressure on herself to succeed because it’s her way of earning your approval, KidsHealth suggests reassuring your child that you love her unconditionally regardless of her awards and achievements. In addition, restrain yourself from putting too much weight on victories, criticizing your child or her teammates after a loss or arguing with coaches about their decisions. These actions might increase your child’s competitive streak because she senses that her success is highly important to you. Instead, compliment your child and her teammates -- especially after a loss -- to demonstrate that it’s their effort and not the victory that is the most valuable experience.