The size of your PSD is determined by the minimum screen resolution (measured in pixels) your design is required to support. Once you know this then you can set a width to your PSD, height isn’t quite as important because the web is usually designed to scroll, so pages can be as long as you like. However, there is a height measurement to the “above the fold” area that you can take into account when you design for best usability.
You can determine what minimum screen resolution by checking your analytics to see what your users prefer when browsing your website. The standard minimum screen resolution used by most web designers is currently 1024 pixel x 768 pixel, but larger screen resolutions are becoming more popular in mass.
However, you have to take into account scroll bars, tool bars, status bars, etc from the browsing screen. This means the actual size of your PSD will be smaller than the full screen resolution. So for instance, if you’re designing for the standard of 1024 pixel x 768 pixel then your actual canvas area on your Photoshop document should be 960 pixels wide and at least 565 pixels (the above the fold area) to fit in a browser correctly.