Begin by opening an image, carrying out all necessary editing operations and flattening it. The image now has a single layer, called Background. Double-click the word Background in the Layers Palette and rename as Layer 0. Use Image> Canvas Size and increase the height and width by about 1in. (tick Relative and enter 1in. in both width and height boxes). Your original image will now be surrounded by a border of empty pixels, shown by a chequer-board effect (this is why we converted Background to a layer - when Background is extended, the new pixels are filled with colour).
The visible area of your image has now been reduced due to the masking effect. Press the D key to make black and white the foreground and background colours respectively. Hold down the Ctrl key and do the following:
Click the Create A New Layer icon on the Layers Palette. The new layer is created below the active layer
Click the Backspace key to fill the new layer with the background colour (white)
then release Ctrl. This provides the start point for a number of interesting effects.
First we are going to paint white onto the black part of the layer mask to partially reveal the edges of the image, so start by typing X to swap the foreground and background colours. Click on the layer mask thumbnail to make it active and select a hard, round brush of about 60 pixels diameter and 100% opacity. Paint along all four edges of the image, aiming to keep the centre of the brush roughly on the edge of the visible part of your picture. You are revealing more of the image, but with an irregular edge (this is one place it helps not to have a steady hand!). With experience you will discover how irregular you like your edges to be.
You may like to add a drop shadow to your irregularly edged image. It's worth playing with all the adjustments in the dialogue box. In particular, begin by reducing the opacity slider to about 35%.
As an alternative to the 60 pixel brush used above, select a finer brush - 10px is a good start - and paint a series of white lines over the parts of the mask that hide the image.
As another option, try using different brush shapes - Photoshop offers some very interesting ones for creative effects.
The Azalea brush
Falling ivy leaves
Scattered maple leaves
This effect was achieved using Filter> Distort> Glass. Adjusting the sliders gives a finer or coarser effect. Try some other filters, like ocean ripple, ripple, wave, crystallize and box blur.
Why stop at one filter? Here I have applied a second filter to the Glass effect:
Box blur: Radius 12px
Motion blur: Radius 60px
If you remember, all of these examples were based on a rectangular selection which was contracted by 75 pixels. You could start with a different shape, like an ellipse. The photograph below was created from the same start image of Ellie, as follows:
1. Draw out an (almost circular) ellipse, contract it by 75 pixels as before and create the layer mask and lower layer.The result was quite pleasing, but I tried one more trick to achieve the end result. I filled the bottom layer with 50% grey then added a Hue and Saturation adjustment layer to give an outer background that worked well with the colours in the original. A black background gave a very striking effect.
2. Apply the Glass filter, followed by Filter>Blur>Motion Blur>Zoom by 36
So now it's over to you. Do try lots of variations. In particular, vary the amount by which you contract the selection, try different brush shapes and sizes, different filters and different slider settings. Also try multiple filters and changing the fill colour of the bottom layer.