First of all, toddlers touching themselves is absolutely normal, whether they are naked or not. In fact, research has shown that babies begin such touching while still in the womb. It would actually be odd if your daughter wasn’t exploring her whole body at this age. But it sounds like your real question is how to teach a two-year-old that while touching herself is normal and healthy, she should do so in private.
Privacy is a difficult concept for any toddler to comprehend, and you should not expect them to understand it until they are between four and six years old. But there are things you can start doing now to ensure that your daughter will begin to grasp the concept.
If you are in a public place like a bookstore, park, or grocery store, and your daughter begins to touch her genitals, you should calmly tell her, “That is something we only do at home.” Think of it as a lesson in manners. Just as we teach our children that they should not pick their noses, floss their teeth or go to the bathroom in public, we can also teach them that they should not touch their genitals in public. You can also tell her that such touching is private, even though she probably won’t fully understand the term until later.
If your daughter is touching herself only when she is naked and at home, it would be fruitless to teach her to only do so in her bedroom because she is too young to understand this. In this case, just remind yourself that this is normal, healthy behavior, and try to be more comfortable with and accepting of her touching.
As your daughter gets older (four to six) you can start to say, “Honey, that is something we do in the privacy of our bedrooms.” And be prepared for her to ask why. At this point you can compare it to using the restroom — “It’s just one of those things we do in private.” You may even say, “Mommy doesn’t touch herself in the living room either.” This is another way to normalize masturbation for your daughter as well.
Finally, remember that discussions with your daughter should be ongoing — don’t expect her to fully grasp the concept of privacy immediately. You will need to remind her repeatedly. Never slap your daughter’s hands for touching herself. This will send a very strong negative message to her about her body, and may negatively impact her sexuality well into adulthood. Masturbation is normal and healthy for toddlers and people of all ages, but it will take time for younger children to remember to only do so in the privacy of their bedrooms. Be patient, expect some embarassing moments (which I find often make great party conversations with our adult friends) and you will do just fine.