Open new canvas. 400x400px, 72dpi, white background.Click on channels panel and create a new channel, by clicking on new channel icon.
Make sure your foreground color is set to white, and background to black. Select your text tool and a chunky sort of font. In this example I used Brushscript, set at 300pt. Type your first letter in the centre of the canvas. The canvas will turn red until you have typed your letter and deselected the text tool. It will be highlighted as a selection (marching ants).
Duplicate this channel by dragging 'Original' onto new channel icon. Rename this Texture + Your Letter. (In this example it is called TextureP).
Hit Ctrl+D to deselect. With texture channel highlighted go to Filter ---> Blur ---> Gaussian Blur. Select a blur setting that gives a good blur but leaves the letter legible. (For Brushscript font, a blur of 6 was used). Save file.
To remove the fuzziness from the letter, Ctrl+Click on Original channel (OriginalP in this example). This highlights the letter with marching ants. Go to Select ---> Inverse---> Hit Delete key. Ctrl+D to deselect.
Now click on your layers panel and create a new layer (new layer icon beside the trashcan).
Choose a foreground color for the letter and hit Alt+backspace to fill the new layer (P layer) with that colour.
Go to Filter ---> Render ---> Lighting Effects. Play around with the lighting till you get an effect you are happy with, then click ok. Ctrl+Click on Original (Original P in this instance) in the Channel Panel. Marching ants will appear around your letter. Select ---> Inverse ---> Delete to remove the colored background.
Double click on the letter layer to bring up blending options and select drop shadow.
Voila! First letter complete. You now need to repeat the foregoing steps for another two letters. This time choose a 'loop' type font such as Edwardian Script or French Script. In this example, Edwardian Script was used, set at 250pt and the blur was 3. When you have finished you should have 6 alpha channels (Original+Letter1, Texture 1; Original+Letter2, Texture2, Original+Letter3, Texture3) and 4 layers (original background and 3 letter layers). In this example the drop shadow was only used on the first letter (P) and not on the others. Save regularly. If you want to apply any other effects to the letters do so at this point. Once you have all your letters the way you want them you need to arrange and loop them.
Once you have the letters arranged as you want them, you need to select the eraser tool. Use a hard eraser, not a feathered eraser because we want a clean edge. You may wish to change the opacity of the two letters you are working on so that the outline of the letter below clearly shows through. You can zoom in for this part.
Remember, the idea is to make the letters look like they are looped together so you need to carefully select the areas to erase, otherwise you may end up with letters that look like they are behind rather than looped.
