Water Splash Text Effect

Start by typing your text using a nice font.

Right click the layer in layer palette and rasterize it. Ctrl+Click the layer thumbnail to get the selection.

From select menu select modify>>contract. Contract the selection by 3 pixels.

Press Shift+Ctrl+D to feather the selection. Use settings as shown.

Press delete to remove the text area inside selection.

Duplicate layer. Select original layer. From filter menu select blur>>radial blur. Apply settings as shown.

From filter menu select sketch>>chrome. Apply settings as shown.

Press Ctrl+U to open hue/saturation window. Apply settings as shown.

Select the duplicate text layer. Double click the layer to open layer style window. Apply settings as shown.