Note: PS7 doesn't support alpha channels for TGAs, so you will need this file.

This tutorial will show you how to create a transparent spray. This version of the tutorial is for Photoshop, and will cover the use of alpha channels.

Create a new 256x256 file in Photoshop.

Add some large text in the middle saying whatever you want.

You should have 2 layers now - one named Background, and the other with the name of your text.

Ctrl + Left-click on the text layer. A dotted selection should appear around your text.

Note: If your text is antialiased you might get some white pixels around the edges in-game. To fix this, with your text selected, go to Select > Modify > Contract..., put 1 pixel then click OK. This will contract your dotted selection by 1 pixel, and hopefully get rid of any white edges in-game.

Now click on the Channels tab (normally next to the layers tab). Click the Create new channel button at the bottom.

Your image should turn black leaving only your dotted selection.

Press Backspace on your keyboard. This should fill your selection with white (if it doesn't, simply use the fill tool). Everything that's white will show up in-game, anything black will not.

You are ready to save your image as a 32bit .tga file.

File > Save As..., select TGA from the dropdown menu. Make sure Alpha Channels is checked.

You can see your spray in-game by using the import spray option in-game, or convert it to a .VTF by using something like VTFTool.