Please note this only works in Photoshop CS and above. If you are on an older version of Photoshop this technique won’t work.
To create a line for the text to follow we need to create a path for it. This is where you will need to be handy with the pen tool but with a bit of practice it is straightforward. First turn on Gridlines by going to View > Show > Grid. Then select the Elipse Tool and draw three circles that you will use as a guide to draw with. Make sure they are evenly spaced. The grid comes in handy here as you can just click on a point, hold down shift and draw the circle.
Then select the pen tool and in the options at the top make sure you have Path selected and not shape layers. Begin drawing your path and try to follow the edge of the circle as closely as possible. Don’t worry if it isn’t perfect as you can come back at the end and fix it. Personally I don’t like my line to be precisely perfect but that is up to you. Once you have completed the path you can use the Direct Selection tool and the Pen tool to move any points that you are not happy with, or even create new ones. Here’s what I ended up with.
Make sure the path is selected and then select the text tool. Hover over the start of the Path and you will see the icon change. This means that the text will follow the route of the path you have chosen. Then click and begin typing. All of your text will have to be on one line and if the text is longer than the space available it won’t show. You can get round this by selecting all the text and then reducing the font size.
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