Let's get started by creating a new document and filling it with black. I made mine 800 by 800 pixels, but you can pick any size depending on how much text you need to fit in. Also, if you are considering printing it and framing it, you need to make it 15.5" x 11.5" with a resolution of 72 dpi. If not, make it any size you like.
Time to put down the text we want to see burning. I just used the word "FIRE" for this example. I used the Arial Black font at 250 points since I thought the block letters would look more intense. Put the text in white. After you've typed in what you want, choose "Layer -->Rasterize -->Type" to turn the text into pixels or an object. Then use the Move tool to reposition the text so that it's centered horizontally and is just a little below the center line vertically. Here's what it should look like at this point:
Duplicate the layer with the text on it. We're going to use the duplicate to create the foreground text effect and the original text layer to create the rising flames illusion. Your layers should look like those below. We're going to work on the middle layer next, so make sure it's selected and highlighted as shown below.
To get the flames rising, we're going to use the Wind filter. This filter only works going to the left or right, so we have to rotate our canvas first. Choose "Image -->Rotate Canvas -->90 CW". Make sure the middle layer is still selected and choose "Filter -->Stylize -->Wind". Select "Wind" and "From the Left" in the options and click OK. We need more wind than one application of the wind filter provides, so hit "Apple --> F" four times to apply the filter four more times. You can use more or less applications depending on how high you want the flames to go. Finally, rotate the canvas back to normal with "Image -->Rotate Canvas --> 90 CCW". This is what it should look like now:
Now we need to make the wind streaks look more like flames by blurring them together. Select "Filter -->Blur -->Gaussian Blur" and set the radius to 3 (make sure you still have the middle layer selected). You can use more or less blur depending on how you want the flames to look. Here's what I got so far:
The next step is to give our flame layer a black background which will be needed for the next step. To do this, duplicate Layer 1 (our original background layer). Merge this duplicate layer with the blurred text layer we just made. To do this, click on the layer above the duplicate background layer and choose "Layer --> Merge Down" or "Apple --> E". This won't change the look of the image just yet, but your layers should now look like those below.
With the middle layer still selected, go to "Filter -->Liquify". We'll use this to give the flames a wavy look. I set the brush size to 80, density to 11 and pressure to 92. Now take the Warp tool and push the streaks around to get a sort of rising "S" pattern over the letters. Also push a bit around the sides of the letters to show some flames coming from the sides, and don't forget to work around the inside of the letters. This step takes a little practice, but it's not too hard. When you're happy with what you see, hit OK. Here's mine:
Time for some color. Select "Image -->Adjustments -->Hue/Saturation" and select Colorize so we can fiddle with the color. Bring Saturation up to 100 and set Hue to about 40.
Duplicate this colorized layer and select this duplicate in the layers palette. Select "Image -->Adjustments -->Hue/Saturation: again, this time with Colorize off. Set the Hue to -20 to make the flames red, click OK. Now, set the Blending Mode of this duplicate layer to from Normal to Overlay. Now we've got some nice looking flames.
Next we want to add some color to the top text layer that just has white letters at the moment. So click on the top layer to make it active and click on the Lock Transparency icon above the layer. This protects all the transparent pixels in the layer from changes so we can change the color of the text alone. We'll make the text a gradient from yellow to brown, so set the foreground color to #f9e400 and the background color to #a36a06 (you may vary these). Select the Gradient Tool and swipe a gradient from top to bottom across the letters. Because of the locked transparency, only the text is affected by the gradient tool.
A Layer Style will be used next to add more depth to the letters. We'll add a Drop Shadow first using the settings shown below. The color I used in the Blend Mode is a shade of orange #ee6a00.
Now we'll add a red Inner Shadow. I used color #ec0606 for the Blend color.
If you want to add the reflection on the bottom like the framed sample in the room, click on the provided link and do the mentioned steps. LINK