In this tutorial we are going to talk about the basics of applying drop shadows, and specifically realistic shadows with a paper clip. Drop shadows are important for making your page look realistic. To start, think of how light would cast a shadow based on your element in general, if its heavy like a metal piece, would cast a small dark shadow while a photo would cast a lighter but wider shadow. The other thing to keep in mind is your shadows should always be cast at the same angle you would not have one shadow to the right and another element with a shadow above and to the left.
Here is a portion of our layout with no shadows it looks pretty flat, and the paperclip does not look attached.
Lets start by attaching the clip. With the clip layer selected, choose your selection tool 
You may want to zoom in here, and select the area of your clip that would naturally be under the ribbon.
Promote the selection to a new layer Ctrl+Shift+P. In your layers palette move the Promoted Selection under the ribbon
You wont see a difference on your layout at this point. Select your paperclip layer and press the delete key and Ctrl+D to deselect. Now your ribbon looks like it is going through the clip
But it still looks pretty flat and unrealistic. Now lets add a shadow to the clip layer.
Effects 3D effects Drop Shadows
Here is where you will need to decide at what angle would the light be shining on this page I use the assumption the light is coming from top left.
Setting Options:
Offset settings adjust where the shadow falls. You can use the Vertical and Horizontal boxes to fine tune or move the X in the left window to make more dramatic changes.
Opacity controls how dark your shadow will be the lower the number the lighter the shadow.
Blur this adjusts the strength and sharpness, play with it until it suits you
Color Palette allows you to select from your color palette the color for your shadow. Black seems a little harsh to me so I use a dark brown color.
New Layer if selected, your shadow will be on a separate layer from your element. I have selected this for the clip.
You can see there is a shadow on the bottom edge of the cut portion of the clip. Ive hidden the ribbon so you can see just the clip with the excess shadow.
Select your paperclip shadow layer, Eraser Tool 
and zoom in to erase the excess shadow. This is where the shadow on its own layer comes into play, we dont have to worry about erasing part of the clip. Be careful to only erase any shadow that is actually on the clip or extends on to your ribbon irregularly.
Now there are only shadows from the pieces of the clip that are exposed. Use the same steps to add a shadow to the ribbon; however you may choose to not have this shadow on a separate layer.
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