Follow this procedure to add a nice fade around your image:
- Open a photo
- Choose the selection tool and choose the type of your choice (ex. Ellipse)
- Drag the selection around the area you want to keep
- Create a new mask layer with option SHOW SELECTION
- Press CTRL-D (unselect everything)
- On the mask layer, Goto BLUR and choose Gaussian Blur
- Choose the radius until it is ok for you
- And done