Step 6: Resize And Reposition The Letter If Needed With Free Transform

If, like me, you need to resize the letter and move it into a better position, press Ctrl+T (Win) / Command+T (Mac) to bring up Photoshop's Free Transform box and handles around the letter. Hold down your Shift key and drag any of the corner handles to resize it. Holding down Shift prevents you from accidentally distorting the look of the letter as you drag. You can also hold down Alt (Win) / Option (Mac) to tell Photoshop to resize the letter from its center, which is often helpful.

To move the letter, click anywhere inside the Free Transform box and drag the letter where you need it. Just don't click on the small target symbol in the very center, otherwise you'll move the target symbol, not the letter. As you're resizing the letter, keep in mind how many other letters you'll need to add so you don't end up making the letter too big:

Press Enter (Win) / Return (Mac) when you're done to accept the transformation and exit out of the Free Transform command.

Step 7: Add A Stroke Around The Letter (Optional)

Depending on the images you'll be placing inside your letters, as well as the background you're using, it may be difficult to make out the shapes of the letters when you're done. To help keep things readable, I'm going to add a white stroke around my letters. I could wait until the end to add the stroke around all the letters, but since I already know what I want to do, I'm going to save myself some time by adding it to this first letter. That way, when I go to create the rest of my letters by making copies of this first one, the stroke will be copied along with it.

To add a stroke, click on the Layer Styles icon at the bottom of the Layers palette:

Then select Stroke from the bottom of the list of Layer Styles that appears:

This brings up Photoshop's Layer Style dialog box set to the Stroke options in the middle column. The first thing I'm going to do is lower the Size of the stroke down to 2 px. If you're working in high resolution, you'll probably want to set your stroke size higher. I'm also going to change the Position of the stroke to Inside. Finally, by default, Photoshop sets the color of strokes to red, which makes no sense. I want my stroke color to be white, so I'll click on the color swatch to the right of the Color option, which again brings up Photoshop's Color Picker, and I'll change the stroke color to white:

Click OK when you're done to apply the stroke to the letter and exit out of the dialog box. Here we can see my white stroke applied to the letter "S":

Step 8: Copy The Type Layer

Before I place an image inside my letter, I'm going to finish adding the rest of my letters to create my complete word. To create my second letter, I'm simply going to press Ctrl+J (Win) / Command+J (Mac) to duplicate my Type layer. Nothing seems to have happened in my document window, but if I look at the Layers palette, I can see that I now have my original Type layer containing the letter "S", as well as a copy of it, also currently containing the letter "S", above it: