Now that you no longer need to sell your grandmother into slavery to afford a decent colour printer (she'll never forgive me but I just couldn't wait), we model makers can use them to create signs, posters, banners, flags and various other items to decorate our models.
In this article, Kishkumen takes us though the creation of the image below. He uses Photoshop however there are many other pieces of software (including free stuff) that can be used to do the same thing. The important thing therefore is to realise what is possible, and then go figure out how to do it with whatever software you have on your own computer. This article will point you in the right direction.

Start with your basic image of rusty metal. This is a trench form I saw laying around a construction site.

Next, find your insignia, grafitti, labels, or other markings. Here is a radioactive danger symbol I made in Freehand. I've selected it (note the blue selection dots around it) and copied it.

I've pasted the insignia in place. Since it's vector art, I can scale this however I want without getting jaggies. In Photoshop, it's on a new layer so I can work on the steel layer or the insignia layer independently.

Note how it doesn't look like it's really painted on. That's because it's brightly-colored and perfect. To make things look real they need to be "dirtied down".
So, select the steel color (or the paint color, whichever is easier) and delete those areas from the insignia to make it look equally worn and chipped.
Do this by selecting the steel color with the eyedropper tool (it turns out to be a bright purple, as you can see in the lower left of the image below). In this photo, the steel is a kind of even color, but so is the yellow paint. If the steel were more uneven and mottled, I'd select the yellow color instead.
From the menu bar go to Select: Color Range. I've turned the insigina layer off so it wouldn't affect the Color Range.

You'll get this dialogue box:

Play with the the Fuzziness setting. Photoshop will select parts of the image in degrees based on how close colors are to the one selected. In the above image, the black areas are selected and the white areas are not selected. Hit OK.
You'll get something like this:

The "marching ants" are the selected areas. Turn the layer with the insignia back on and select it. Then hit Delete.
You'll get this:

If the wrong part of the insignia deletes, hit Undo and then invert the selection with Select: Invert. Then hit Delete again.
It's chipped but it still looks too bright and cheerful. It needs more weathering. So go to the menu bar and get Image: Adjust: Hue/Saturation.

Knock the Saturation down (the colors get duller and less intense) and increase Lightness (washes things out so those blacks aren't so perfect black).

Insignia paint often isn't as durable as the paint underneath and will tend to chip and wear further. So use a brush tool to nibble away at the edges:

Finally, add some grime, rust streaks, grease, dust, blood, or other signs of weathering. Here I've selected a rusty color and airbrushed lightly:
