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If you haven't already found the image you wish to use head over to
a stock photo website such as StockExchange, GettyImages,
Deviant Art Stock, or FreeFoto. Cut out images are preferred to non
cut out images because it will be less work for you in the long run.
Simply type cut out in your search for a picture along with whatever
it is your are searching for to find a cut out image. Find a good
image and put it into Photoshop.
If you image is a cut out then don't bother with this. If your image is
not a cut out then erase all the undesired areas around the desired
image, thus making your image into a cut out.
Crank the contrast somewhere from 40 to 50 and mess with the
brightness, until you get a good high contrast image that still looks
good. If some areas come out undesirably dark press Ctrl+Z t and
then dodge and burn the problem areas, then try the contrast stuff
again. This is a trail and error process.

Now it is time to Apply the Cut Out Filter. Go to Filter>Artistic>Cutout
and Use 8 Levels, and an Edge Simplicity of 0. Then go to Select>Color
Range>Shadows. I do this to get a general feel for my image, if there is a
layer of color that is essential to your image and it is to bright for the color
selection later in step five than select that layer with the magic wand and
brighten it a bit.

Go to Select>Color Range and then choose Shadows from the drop down
menu, This will select all that will be the darkest layer in your stencil. Create
a new layer while this area is still selected and name it Dark Layer, fill the
selection in with Black. Make the "Dark Layer" Invisible and select the
original image, repeat the same process except select Midtones from the
drop down menu. Create a new layer and name it Middle Layer, fill this layer
in with dark gray. Repeat the same process allover again but this time select
Highlight from the drop down menu. Name the new layer Light Layer.

You can now delete your base image layer. Save your work right now incase
you fuck this up. Now Duplicate your "Light Layer" and your "Middle Layer",
and merge them together into one layer. Now take this layer and merge it
with your "Dark Layer". Now go to Image>Adjustments>Brightness/Contrast
and turn down the Brightness so that everything is black. It should look
something like the image on the right. Make this layer Invisible.

Save your work again just incase . Now Duplicate your "Middle Layer",
and merge it together with the original "Light Layer". Now go to
Image>Adjustments>Brightness/Contrast and turn down the Brightness so
that everything is black. Now go back into >Brightness/Contrast and make it
all light gray. Your new layer should look something like the image on the
right.

Now all you should have is a Dark layer, a Light layer, and your original
"Middle Layer". Turn all the layers to visible and arrange them so that the
darkest layer is on the bottom, and the mid tone layer is on the top, leaving
the lightest layer in the middle. Your image should looks something like this.
Feel free to change the layers to color, to make this look more realistic, But
remember the spray paint only comes in a certain amount of colours. You can
also experiment with tearing a layer apart into 2 different layers, such as
making her hair one layer, so that it can be red highlights, and making her
pants another so they can be blue. Print out each layer individually and get
them laminated at Kinko's, or glue them to a Manila file folder and cut that
shit out.

The image to the right has Six layers.