Easy cheese.
Import both pictures into one single file. Make sure they are in seperate layers though. The top layer is the one that will actually fade btw.
Now all you need to set up is the following before we start:
Paint Bucket is turned to standard Gradient, or whatever you need to do to get gradient on older photoshops(I have the CS3 model)
Make sure the colors chosen are Black for Main, and White for secondary. (you can switch after the tutorial)
THATS ALL YOU NEED TO HAVE SET UP FIRST!
Afterwards, just click the top picture layer, and give it a mask. How? On most photoshops, it's down underneath the layers display, there will be a little icon of a white circle on a grey/black square. This represents a LAYER MASK. Dont confuse this mask with any other mask. Because it's not the same.
After you made that mask, go ahead and click the gradient tool.
Then on the top layer(the one that has the layer mask) go ahead and make a little random line with the gradient, as if to paint a gradient of black and white.
What will you get? Whatever was BLACK will stay, whatever was WHITE will vanish, the greys in between will give off a FADED look.
It's really easy.
Once you've masters the technique, express yourself in the method with creativity by using different gradients for different kinds of fades, or hell, try using the mask feature for some cool sillhouette effects.
But thats all you need to do to make the same effects that you asked for.
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BTW, very surprised that none of you guys knew how to do these photoshop techniques when you guys know so much other randomly advanced stuff. I just assumed this was more of a basic tool, but meh. Whatever. you guys still do stuff i can't do.