My son would hold his pee for hours and refuse to even try the potty. Most toddlers won't be ready physically to potty train before the age of three, but if you need to do it earlier like we did (for preschool, for example), a reward system and positive reinforcement are great. My son's doctor agreed, said to find your child's "currency", if he wants something bad enough he'll work for it.
We got him "Elmo's Potty Time" and he watched that for a couple of days. Then we introduced a reward system - it helped train him in just a couple of weeks and he had fun using it.
We made up some "coupons" on the computer (or you can buy tickets at Staples). We used these for potty training, and also to reward good behavior for when he does chores, or for outings (grocery shopping, errands) or when shares his toys at playgroup. We decorated each coupon with a picture of a sun but you can use whatever you want.
We also made up "super special coupons", for things that we really want to encourage or that he really doesn't want to do. For example, if he stays dry all day, he gets one of these. Or if he gets a shot at the doctor's, he'll also get one as a reward for being brave. We put two suns on these and he understands these are worth a lot more than the regular coupons.
At first, we gave him one coupon for just sitting on the potty for 10-15 minutes (he used to run away before), every hour or two (how often depends on your child). Then we gave him a coupon only if he went #1. If he went #2 as well, he would get another coupon.
He reedems the coupons for rewards. Find your child's currency - what they value - to see what will work. For our son, for example:
1 TV show = 1 sun (Curious George, Bob the Builder, Superwhy, etc.)
1 trip to the playground or to library = 3 suns
1 book = 5 suns
1 outing with his tricycle or car = 5 suns
1 little matchbox car = 5 suns
1 toy = 20 suns
He keeps his coupons in a little plastic bowl. As he redeems them, I save them in a separate place to give to him later.
It doesn't always work, no amount of coupons will get him to eat his veggies, but it's worked for many other things. We've also found out that punishing bad behavior by taking away coupons doesn't work - I think he's too young to understand this. Rewarding good behavior has been a lot more effective.
Another great tip I got was to use cotton training pants (sold at Target) instead of regular underwear or pull ups. These look like thick underwear and are allowed in his preschool - it absorbs enough to prevent a huge accident but will let him feel wet. You can use a plastic training pant over the cotton one (at home or at night) but he hated these enough to try to not have accidents. Our motto is Elmo's, "accidents happen and that's OK"! In all, it's been a positive experience for him and he rarely has accidents now, day or night.