Here is Kili performing the ring on peg by color trick as well as flighted ring on peg trick. I laid out four rings and Kili took them one at a time and put them on the corresponding ring by matching the colors. Then I had her fly to do the trick by throwing the rings on the floor and Kili flew to get the ring.
Now I would like to outline the steps involved in teaching this trick. Just keep in mind that this isn't a literal step by step tutorial but more of a guide that brings forth the necessary steps to work on to get to this stage with your parrot. It will be up to you to learn how to teach and then teach some of the macro steps that I will bring up. If you don't have some elementary knowledge of trick training or your own trick training books/dvds, this trick is really just too advanced to be able to cover all right here. I would like to be able to recommend an ideal all-in-one parrot training book or DVD but I have some major issues with most of the materials out there and currently have not found a single one suitable of my endorsement. So it is up to you to find sources for learning the absolute basics.
1) You will have to start with a tame parrot that you can handle. The parrot should be familiar with the training process as well as the clicker. I'm not going to explicitly say to click, praise, and/or reward your parrot for doing the steps as we go along here. Since this is a very advanced trick, I will assume that if you are attempting to teach it to your parrot, that you have had previous success with teaching tricks and understand the overall process involved.
2) You will have to teach your parrot to fetch.
I am least interested in describing the basics of teaching the retrieve here because it is an entire lesson in itself. When I get a chance, I'll try to write a separate article about teaching fetch. In most basic terms, you teach fetch by handing something to your parrot to hold and then catch the object in a cup as it falls and reward the parrot. You keep doing that until the parrot knows to bring the object to you. Sorry for the short explanation, I'll try to get another article up about fetch when I have a chance.
3) Teach parrot ring on peg trick with a single ring and peg. If your parrot is familiar with the retrieve command, you will teach your parrot to bring the ring to you by giving the parrot the ring and asking it to bring it to you. Hold your hand very close to the peg if not right over it for the parrot to deposit the ring into. Once the parrot knows how to fetch the ring, try to get it to fetch and put it down somewhere on or near the peg. The toughest part of this step is the transition from your parrot fetching the ring to near the peg vs making the complex motion of getting the ring onto the peg.
The best way I found to get the parrot to put the ring on the peg for the first time is to cheat. When the parrot comes over to drop the ring near the peg, you grab the ring a bit and assist the parrot to get the ring up and onto the peg and then make a big deal about it and give it a big treat. After a few times, the parrot should catch on and you should not assist in order to encourage it to do so on its own. Here is a situation where a clicker is very helpful because you can click the exact moment your parrot hovers over the peg with the ring (in case its not dropping it or missing the peg). After the discovery stage, it's just a matter of practicing some more.
Let me mention that I highly recommend you get a set of 2-4 matching rings and pegs from the start. This way when you are simply practicing the mechanics of the trick, the parrot can already start to learn the color and recognize the matching of the color to the peg. For each training session, you can use a different ring/peg set so that it can get used to all the colors. But only stick to using one ring and one peg at a time until the parrot is very well familiar with getting the ring onto the peg reliably.
4) Teaching your parrot flighted ring on peg is easier than teaching ring on peg by color so do this next. Of course this step assumes your parrot is flighted, recall trained, and flighted retrieve trained. If not, check out this flighted tricks guide. Or if your parrot is clipped, not flighted, or you are not interested in training the flighted portion, skip to the next step.
Basically, if you're parrot already knows ring on peg, recall, and flighted retrieve, it is just a matter of getting the parrot used to the object and it should be able to connect the dots by itself. Start simple by putting the ring on one chair and the peg on the other with a short gap in between and let the parrot fly back and forth to do the fetches. Eventually throw the ring on the floor and let it fly down from the chair to get it and back onto the chair to put it on the peg. Eventually work it up to the point where you can throw the ring from a standing point and have the parrot fly to get it and fly it to wherever the peg is.
5) Finally the color matching portion of this lesson. This part takes a lot of training and a lot of patience. Some parrots may catch onto this quicker than others. However, all parrots have fantastic color vision and by teaching this trick to your parrot you can disprove anyone that thinks that parrots cannot discern and understand colors.
For the sake of this tutorial, I'll just assume you are using red, green, and blue ring/peg combinations but in reality you can use whatever you want. Ideally the colors should be far apart at the initial stages but once the parrot understands conceptually the importance of color matching, I don't see why it wouldn't be able to discern even close shades of colors.
Get your parrot warmed up putting a ring on the peg by alternating a red/red set and a green/green set. Now finally put down two pegs red and green (substitute whatever you want) and give only the red ring to fetch. If the parrot puts red ring on red peg, click and reward. If the parrot puts red ring on green peg, ignore the parrot and let it try again. Whenever you parrot fails, do not reward. However, try to avoid letting your parrot fail too much or it will lead to extinction of the ring on peg behavior all together. So if the parrot is consistently doing the wrong ring/peg combination, try to put the ring a little closer to the correct peg, or put the parrot down facing the correct peg with the incorrect behind its back, etc. Basically try to manipulate the situation to encourage success for your parrot. You will just have to practice enough trials until your parrot realizes that red to red is good and green to green is good but not red to green.
While at first you want to bias situations to encourage success, pretty soon you will have to stop doing that or else your parrot will learn to put the nearest ring on the nearest peg rather than the correctly colored ring on the matching peg. This is why you will have to randomize situations and only tolerate correctly color matched attempts. You will know that your parrot understands the color matching concept when you can place the red ring closer to the green peg (or even put the green ring in the path to walk to the red peg) and the parrot neglects the green peg and brings it to the red peg anyway. As soon as you are having basic color matching with 2 pegs and one ring, introduce the second ring soon after. You should be able to place to rings down and the parrot walk to take each one to the correct peg. Continue this process for teaching the 3rd, 4th, and on to infinity colored ring.
6) And now you can combine the color matching ring on peg trick with the flighted retrieve component to have your parrot fetch each ring and fly to and place on the correct peg.
Perhaps the next stage would be to put each ring on a different surface and to teach the parrot to fly to the correct peg by scouting out which surface has the correctly color matched peg.
Missy