The picture must be 156x210 and in .dds format. Cropping a picture's easy enough in paint or Awesome Screenshot, an extension I've come accustom to using. There's a program called Paint.NET that you can use to convert your image to .dds. The trial version is good enough and all you have to do is Google it or search for it on the Microsoft Store.

You need to know the name of the picture used for the portrait. The base game's leader portraits are under "Steam\steamapps\common\Hearts of Iron IV\gfx\leaders\(their country tag)" and DLC portraits are similarly organised under "Steam\steamapps\common\Hearts of Iron IV\dlc".

Name your image after whichever portrait you're aiming to override.

Given that Hearts of Iron portraits are stored under "gfx\leaders\(their country tag)" that's what you have to mimic. Create a "gfx" folder, a "leaders" folder in that, and then a folder of the appropriate country tag. Like GER for Germany. Then throw your to-be portrait in.

On the Hearts of Iron launcher there's a button called "Mod Tools." By 'creating a mod' you are essentially making a folder to throw your content in and defining the basics of what it is. At this point take the "gfx" folder your portrait(s) is in and plop it in the appropriate mod folder located at "\Documents\Paradox Interactive\Hearts of Iron IV\mod".

After throwing the "gfx" folder into the relevant folder that turns all your hard work into a mod, you can upload the thing to the whole wide world. Or not.

If worse comes to worse and any of this seems confusing, you can use my or any similar mod as a reference. Mods are held under "\Steam\steamapps\workshop\content\394360" and digging through their guts should clarify any questions you have.