You will need to begin to incorporate "set-ups" in your training sessions. A "set-up" is a situation that would normally tempt your dog to leave the yard, such as a person walking by and crossing the boundary, or another pet outside the boundary. These will teach your dog that he needs to pay attention to his whereabouts, regardless of the situation. Until now, the training has not been tested under conditions where your dog has a heightened level of desire. You may begin this training by having a family member walk out of the yard. Your dog should still be on a long leash and wearing his dog fence collar. Remember, DO NOT call your dog out of the boundary!
If your dog refuses to follow the family member, praise him warmly. HE IS LEARNING. If your dog decides to follow the family member, allow him to enter the signal field and receive a correction. Again, your dog may respond by jumping and yelping. Quickly pull him back into the safe area of the yard while smiling and praising on the way. Repeat the process with other "set-ups" such as other pets, a ball, a stick, etc... in various places around the yard. Use something that really excites your pet. Sometimes with dogs that have a high food drive, you can throw some lunch meat or a hot dog just past the flags. This process will cause your dog to make a choice and it is a critical point in his learning process.
If your dog is not responding when he enters the signal field, it is usually due to the dog fence collar being too loose, or his hair is to thick to make good probe to skin contact. If the dog fence collar is fitting properly and your dog does not respond when he enters the signal field, this usually means that the correction level is set too low. Adjust to a higher level. To help adjusting your Petsafe dog collar click here: http://www.discount-pet-superstore.com/outdoor/deluxe.htm
Before proceeding to Phase 3, be sure your dog is happy to run and play in the safe area of the yard and is avoiding the training flags, if not, spend an extra day or two on Phase 2.