Step 1.
Begin by open an existing or new document in photoshop of any size. I will be working with a 400x400 document for this tutorial. I have also filled the background color with black (#000000); however you can choose any color you wish.
Step 2.
Go ahead and select the Text Tool (
) and select the font, and text size that you would like to use for this effect.
I am using a font called Bauhaus Md BT.
Here are the exact settings I've used:
The font color used here is: #0048A9
Note: To add a nice effect try alternating the text size making every other character slightly larger or smaller in size.
Step 3.
Hold down the CTRL key and click on the layer thumbnail to create a selection of its contents.
Go to Select->Modify->Contract with a setting of 2 pixels:
Press 'M' on your keyboard to select the Marquee tool, and move the select down a few pixels by tapping the down arrow on your keyboard two or three times:
Press Ctrl + Alt + Shift + N on your keyboard to create a new layer.
Set your foreground color to white (#FFFFFF) and your background color to black (#000000).
Get out the Gradient Fill Tool (
) and set it up as I have done here:
Fill your selection with a black to white linear gradient as I have done here:
Change the Blending Mode of this layer to "Screen":
Result:
Note: Do not de-select the selection.
Step 4.
Go to Select->Modify->Contract and contract the selection by 2 pixels as we did before:
Press 'M' on your keyboard to get out the Marquee Tool.
Now move the selection up a few pixels by tapping the up arrow on your keyboard.
Press Ctrl + Alt + Shift + N on your keyboard to create a new layer.
This time apply a black to white gradient using the Gradient Tool (
) as I have done here:
Press Ctrl + D on your keyboard to de-select the selection.
Change the Blending Mode of this layer to "Overlay":
Result:
Step 5.
Press Ctrl + E on your keyboard 2 times. Doing so will merge all three of these layers together.
Double click this layer and apply the following blending options:
Bevel & Emboss:
Pattern Overlay:
Result:
Step 6.
Press Ctrl + J on your keyboard to duplicate this layer.
Go to Image->Adjustments->Invert (or press CTRL + i) to invert the colors.
Result:
Change the Blending Mode of this layer to "Exclusion":
Result:
Step 7.
Press Ctrl + J on your keyboard to duplicate this layer.
Change the Blending Mode of this layer to "Screen":
Result:
Step 8.
Press Ctrl + E on your keyboard 2 times to merge these three layers together.
Double click this layer, and apply the following blending options:
Satin:
Color used here is #19B6FD
Stroke:
Result:
Step 9.
Press Ctrl + J on your keyboard to duplicate this layer.
Go to Filter->Artistic->Underpainting and apply the following settings:
Go to Image->Adjustments->Invert (or press Ctrl + i) to invert the colors:
Change the Blending Mode of this layer to "Overlay":
Final result:
And that concludes this very cool and useful text effect. Try applying this effect to different font styles, as well as adjusting the colors used for some very cool effects!
More Tutorials: 
