Start off in photoshop or whatever program you use to that can make "smooth" graphics.

Image

Then, copy it over to the MMF/TGF editor.

Image

Then, copy the same thing over to paint.

Then, right click and "negate colors"

Image

Copy the negated image over to MMF as an alpha channel.
1.click on transparency (or press Y)
2.choose alpha channel
3.click edit
4.then paste it in

And then you should have a alpha channel graphic