Parrots are very smart animals. They have the amazing ability to mimic human speech, and can also copy actions. This is how to use their mimicry skills to teach them how to dance.
See Ruby's combined dance moves here
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Step 1: Before You Start
1. The parrot or parrots you wish to teach must be comfortable with you. Parrots tend to attach themselves to one person and if you aren't that person then there isn't much point trying.
2. Parrots have short attention spans. This means that they will benefit more from two 10 minute sessions than one 20 minute session. If your bird doesn't want to play, it wont even attempt to learn.
3. Be prepared to look like a complete idiot. In order for your bird to learn, you must do the actions. This means a lot of bad dance moves and some odd stares if you're not alone or your curtains are open!
Step 2: Pick a Song
Music choice is important because your parrot will start to associate a particular song with dance time and will be "in the zone" more quickly than when it has to guess why you are moving around like a dying elephant. Pick a song or artist you don't mind listening to because there will be a lot of repetition. I chose songs by Queen because there are a lot of fast beats and who doesn't want a parrot that dances to Queen?!
Step 3: When to Train
Train your bird when they are most active. When a parrot becomes noisy this usually means that they want attention. This is the ideal time to start training. Only train for short periods of time and make it fun for the parrot. If you try too hard or get angry with them, they will see dancing as a negative action and it will take a LOT of time and effort to correct. Parrots can usually learn simple actions within about a week, depending on how often you train them. You will be surprised how fast they pick things up! Don't be surprised if they start dancing when you walk past after showing no progress at all.
Step 4: A Simple Move - Head Bobbing
Head bobbing is commonly referred to "dancing" in the human community nowadays, and is a very easy move to start off with your parrot. Put them on the top of their cage, on their perch or on the back of a chair - wherever is most comfortable for them. When they are paying attention to you, turn on the music and nod your head enthusiastically for a few seconds. It should catch their attention. When they are looking at you, encourage the bird with words like "come on *name*, nod" or "nod your head *name*" to involve the parrot. Make sure you use it's name or a phrase it is used to like "pretty boy/girl" so that it knows that you are referring to it specifically and you aren't just losing your mind.
Repeat the nodding and talking, you can pat your bird or give it a small treat when it starts to move. Remember, if the bird seems bored or distressed by the thought of it's owners head about to fall off, take a break and try again later. Pretty soon it will pick up the move and you can jam together.
Step 5: Wing Stretch
Because of the differences in the anatomy of a bird and it's owner, you will need to make it easier for your bird to understand what to do. This is especially important when trying to teach it wing type dance moves. When teaching the wing stretch, tuck your hands into your underarms like you are doing the second step of the chicken dance. Hold your wings to the sides of your body and slowly raise them to parallel with your body. As you are doing the move, give a vocal command such as "Stretch your wings" or "Do the wing thing". Give your bird a pat and some encouragement when they show interest and repeat until they pick it up.
Step 6: The Dip
For the dip you want your parrot to dip its head low and raise it again. Ruby, the parrot in the picture, learnt this at the same time as she learnt the wing stretch and so performs them together but they can just as easily be taught separately. To teach the parrot how to do this move (you guessed it) assume the chicken dance pose and do the dip with them while giving a vocal command. By now, your bird should recognise dance time and be interested right away. Repetition is key and don't forget to praise your bird as you go.
Step 7: Some Other Dance Move Ideas
If you can teach your talented little companion to move its foot, this combined with the other 3 moves is nearly the time warp.
A bird-modified version of the Thriller's famous claw move can be taught in the same way as teaching a bird to wave. Use a vocal command of your choice while moving a finger towards the parrots foot. If they lift it, praise and repeat. If they don't, touch the foot briefly and your bird should move it away. When they lift it, praise and repeat. Once you teach the vocal command, you can switch to waving yourself while saying it until the bird associates the action with the move too. Teach your parrot to wave its head side to side using the same method as the head bob technique.
These moves are only limited by your imagination!