If you're after a more watery effect then use a displacement map.
This is done very easily.
- Download an image of flowing water.
- Convert the image to greyscale by going 'Image' - 'Mode' and 'GreyScale'.
- Save the grey image as psd.
- In a new psd file, write your text.
- Then go 'Filter' - 'Distort' - 'Displace' play around with the numbers to get your ripple just right, then chose the grey image psd.
An easy way for something similar will be to rasterize the text layer and then transforming it. Rasterizing text layer can be done by right clicking on the layer and selecting
rasterize layer. This will make the text layer behave like normal image layers and it can be transformed in a variety of way using
warp,distort options. For transformation shortcut is
ctrl+t and then right click on the active selection to change transformation mode. Play with it.
Note : rasterizing text layer will remove text editing capability. So it is important to finalize the text before starting transformation. Will try to add a pictorial guide later.