Children's Nightmare Banishing SpellBy Lady Eileithya Finncaev. 
When my daughter went through a spell of nightmares, we found a simple spell in "Spinning Spells, Weaving Wonders" and modified it a bit. We did the original spell, and incorporated a couple little extras
into our bedtime ritual.

Spell Contents:
*child's choice of toy to empower
*6 blue & white candles with gold trim
*sage stick, to cleanse
*anise, to protect
extras for bedtime:
*cranberry juice
*cedar oil

Spell:
Since children and long rituals don't seem to mix, a simple circle
casting should be sufficient. Have them help you imagine the protecting
light as you cast the circle. Use your own parenting instincts to
determine how much ritual your child can deal with.
1. Light candles with child (if they're old enough, let them light 
the candles with a long match)
2. Light sage and anise to cleanse the toy. We said, "Anise & sage
please help this mage. Clear this toy and make it pure. These awful
nightmares we must cure." (note, I am an awful poet, use what you feel
works best for you!)
3. Have the child hold the toy in the air and say something to the 
effect of, "Lady, see this tool that is pure and prepared to help
in our magic. Bless it now to become an implement of nightmare banishing."

Now is a good time to talk about nightmares or simply close the circle if 
you wish. At bedtime, we throw in these extras to insure a good night's
sleep:

*Put the child to bed and give them a little cranberry juice. As they drink
the juice, say, "Past the gums and through the lips, peaceful sleep
is in each sip"
*Anoint the four corners of the child's bed with cedar oil, saying,
"Fears of things that bump and fright, you're not welcome here tonight.
As my child dreams in sleep, only good thoughts s/he will keep."