Screw a metal ceiling hook into the ceiling above your waterbed. If you want the canopy to be draped all the way around your bed, install the hook directly over the center of the bed. For a canopy that covers only three sides of the bed, install the hook above the head of the bed.
Drape a measuring tape from the ceiling hook down to the floor beside the bed. This measurement will tell you how long your fabric panels need to be.
Select the fabric for your canopy bed. Sheer or light fabrics are easiest to work with and create the feel of a canopy bed without the heavy drapery. Thicker fabrics can be challenging to work with, but provide added privacy and help retain heat.
Measure the perimeter of the bed. By combining this measurement with the measurement you took earlier, you will have the total dimensions required for your fabric.
Cut panels of fabric to the required length for your canopy. Bolts of fabric are typically available in 48- and 54-inch widths, so keep this in mind when cutting your fabric. Cut enough panels so that when you sew them together at the sides, the width will equal the measurement you took of the perimeter of the bed.
Sew the fabric panels together along the sides using a 1/2-inch seam allowance. Fold over the top and bottom edges of the assembled fabric panel and hem both edges using a 1/2-inch seam allowance.
Drape the top edge of the fabric panel over a 10-inch foam ring. Draw the fabric down so it overlaps itself by 4 to 6 inches. You may need to gather the fabric to ensure that it all fits on the foam ring.
Hand-stitch the overlapped portions of the fabric, securing the canopy to the foam ring. When you've finished, distribute the gathered fabric evenly along the circumference of the ring.
Tie two equal-length pieces of ribbon to the foam ring. The ends of each piece of ribbon should be across from each other and the pieces of ribbon should cross in the center of the ring. The four ends of the ribbons should be spaced evenly around the ring.
Hook the two pieces of ribbon at the cross-section over the ceiling hook you installed earlier. Arrange the canopy fabric so it is draped evenly around the bed. You can choose to arrange the canopy so that the opening is near the head of the bed or the foot of the bed.