Finally, here goes real Photoshop trick! The soft brushes are good for background colors, and hard brushes are good for outlines, but neither are good enough to draw fire. I tried using my tablet pressing hard brush gently, but I ended up with dragon made of fur, not fire :-) So I started playing with changing settings of default Photoshop brushes. Finally, I achieved something that satisfied me (I realize it is not perfect but drawing fire takes a lot of skills, I am only starting my way to it). You can download tool preset and try this brush yourself

Using this brush, make some strokes around the edges of dragon... (on this image, I show only this layer on black background, so you can better see how this brush looks)

And then set layer mode to Overlay, and duplicate layer. This is the result, shown with all layers visible.
Next trick is usually used in tutorials like Make your own Aqua OSX wallpaper! But I found I wanted this effect here too. Set color to grey (HEX 808080). With pen tool, create a shape of dragon.

Set layer mode to Overlay. Because layer is grey, it will become invisible - do not worry! :-) Create new layer, and with black and white large soft brushes, put some dots here and there.

Then, Create clipping mask (from layer menu). Magically, the brush is masked by vector layer, and inherited overlay!
You can repeat the same steps to create additional curve inside wings.

And, use the same technique to make dragon head (or, unlike me, you could do it on previous step! That would be wiser :-)

This is how the head looks when I set shape layer mode to Overlay, then add black and white brush dots, and create clipping mask.

Use Pen tool to add white eye, then set its layer mode to Overlay too.