Growing up, my brother and I used smooth and wire fox terriers for squirrel dogs. The best I ever had was a smooth fox. He was born a natural, and did not take much training to make him top notch.
The defining characteristic of a good squirrel dog is sight. Since most of the time, the squirrels are out of smelling range, the dog must be able to follow the squirrel as it travels along the tree limbs, and lock on to it when it hunkers down. Next to that, he has to like barking at the squirrel. Barking dogs keep the squirrel off balance.
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