How to apply a liquify effect to your work
First you have to find the image that you want to apply the effect to ( this effect looks better on a 3d image ). You can import you image by going to file, place and then find your image.
Next you have to make sure the layer is editable, you can do this by right clicking on your image in the layer bar and selecting rasterize layer.
Position the image where you want it on the page. Look up the top and go to filter and click on liquify.
You will see a blank canvas on your screen with your image. You will use a brush tool to click and drag on your image and this will smudge it almost. On the right of the canvas you will see a list of settings, that you can change to alter the strength of your brush.
Once you have applied the effects that you want, you then select okay and then you have applied the liquify tool.