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Animal behaviorists and researchers have many theories about what tail wagging means, and they all agree that it's a method of communication. After all, dogs don't wag their tails when they are alone. However, what is the dog trying to say?
Some people say dogs wag their tails to show they are excited, which can be a good thing or a bad thing. Due to the fact that dogs usually wag their tails to greet their "masters," some think tail wagging is a sign of submission. However, studies of wolves shoot a hole in this theory - wolf puppies wag their tails when they see their mother, but the mother wags her tail as well.
Recent studies have shown that the tail wag is more complex than it appears. Animal Planet's dog behavior guide says that we need to look at the tail position, and the direction and speed of the wag to interpret what our canine friends are trying to say. If the tail is wagging toward the right, the dog is happy. If the wag is toward the left, the dog is scared about something. A tail held low means submission or that the dog is upset or worried about something (for example, your dog knocked over your favorite plant and knows you're going to be angry).
Perfect Puppy Care says that a tail held high with only the tip moving is a sign of dominance. This also allows the alpha dog to spread more of his scent.