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In this tutorial I'll show you how to create a badge using Photoshop CS4. It's very easy but it takes some time. So, let's stop wasting time and get started.
Step 1
First of all, open a new document and draw a round shape in the first layer.

Step 2
Now create a new layer by pressing Shift + Ctrl + N and using the pen tool and draw any shape you'd like as shown below.

Step 3
After that, bring the layer with the circle above the layer with the new shape (if it's not already above it) you've drawn and then merge them together by selecting them and clicking Ctrl + E.

Step 4
Now, let's add some shadow to the layer. Go to the "fx" icon in the layer palette and choose Drop Shadow.

Step 5
I've set my values like shown in the figure below.

Step 6
To make our shape more realistic, let's add some bevel and emboss as well. From the same "fx" icon, click on Bevel and Emboss and set the values as you wish until you start seeing the change you want in your shape. I've set my values as shown below. Make sure the Inner Bevel is selected in the menu.

Step 7
Now, I'll add a color overlay, again from the same "fx" icon. I choose a blue color. You may choose whatever color you prefer.

Step 8
This is how my shape looks so far.

Step 9
Create a new layer again and draw another circle shape inside of the shape that we already have.

Step 10
Now, let's add again some blending options. All these options can be accessed from the "fx" icon in the layer palette.
First, some drop shadow.

Step 11
Let's add some Outer glow this time.

Step 12
And this time, I'll add a Gradient Overlay.

Step 13
This is how the shape should like by now.

Step 14
Again, one more time, create a new layer and draw a circle inside of the shape.

Step 15
We'll add many blending options to this one. So follow the images below.
As usual, the first thing that we’re going to add is a drop shadow.

Step 16
I'll add some inner shadow as well.

Step 17
Let's add some outer and inner glow as shown below.


Step 18
And finally we'll add some Overlay Gradient.

Step 19
The values that you see above, are not going to give exactly the same result as mine. You have to play around with it a bit until you adjust the shadows and light correctly.
This is how my shape (badge now) turned out to be.

Step 20
I'm going to add a few more white shadows to the shape. To do that, create a new layer, select the brush tool and set the foreground to white. In the new layer, paint along where you want to add some white shadow. I added more to the edges as you can see below.

Step 21
Now, to add a stamp, click on the brush Tool and select the brush you want to use from the options in the menu. I created a brush for this tutorial. But you are free to use whatever brush you want either from the Photoshop Presets or any brush you downloaded from the internet. Choose the opacity and size of the brush that you want.

Result
I added some outer and inner glow to the shape. Here's the final badge.


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