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     Drop Shadow using Layers

    1.
This text has no dropshadow. It has little contrast from the background, and appears flat.
 
    2.
Creating Dropshadows using Layers

This shadow is soft, yet it ads a lot of contrast to the text, due to it's large surface area. This shadow can be created in any version of Adobe Photoshop.

To create this drop shadow:
    3.
In the Layers window, hold down Ctrl, and click on the layer you want the shadow applied to. In this case, it's the text object phong. This will load the layer transparency.
    4.
Create a new layer , and drag it under the layer you want the dropshadow on. Double click on the new layer, and name it Small Shadow.

Press D on the keyboard, to ensure the selected foreground color is black. Fill the selection Alt+Backspace, and then deselect Ctrl+D.
    5.
Now, Gaussian Blur the Small Shadow layer 3-6 pixels, to create a nice ambient shadow around the edges.

Filter > Blur > Gaussian Blur...
3-6 pixels
    6.
Drag the Small Shadow layer onto the new layer icon , to create a duplicate of it. Double click on the new layer (Small Shadow copy) and rename it Large Shadow.

Gaussian Blur the Large Shadow layer by about 20 pixels.

Filter > Blur > Gaussian Blur... 20 pixels
    7.
Next, select the Move Tool (V), and drag or nudge the shadow down and to the right.

Finally, change the opacity of the Large Shadow layer to 80%.

Once you have the desired effect, feel free to merge the two shadow layers (Ctrl+E).

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