Clonidine has a mild sedative effect that promotes sleep. My son took clonidine from age 6-14 years old. It worked well for him until he reached adolescence.

I am not familiar with its effect on nightmares/anxiety. I would not use it in the daytime for anxiety. Try taking it about thirty minutes before your bedtime if you have trouble falling/staying asleep.

Did your doctor not explain the drug to you?