With the alpha channel we gain control over the opacity information of an object, so we can make it transparent. We can also paint in the the alpha channel to ‘form’ a selection to our liking. We use the alpha channel in the same way as in the icecube video but this time we delete the black background of a flame image.

With this technique we can make the flame as much as transparent as we want it.
Now here is the video. Let me know if you have any additional questions. Have fun!

In the next video I will show you how you can colorize fire and smoke effects with different layer masks.

Here are the files used in this tutorial: demon on iStockphoto and fireball on stockexchange