-you have a cloud texture which fades to black on the edges
Often additive or screen looks good if you have a texture drawn on a black background.
[quote:xknux4ad]how come theres no way of editing the alpha channel as just a black and white image
The built in tools already use alpha channels. Have a play with the brush hardness etc - you can draw with nice soft brushes which automatically affect alpha. Or, you can use the Erase tool in a similar way, with hardness to erase softly from images. So you could draw your cloud, and use the erase tool to soften out the edges with alpha.
I don't think theres any real need to edit the alpha separately as a black and white channel. I think the brushes the picture editor has do a good job. And of course you can always draw graphics in more advanced editors like photoshop and import them - but I think even photoshop doesn't have a separate alpha channel editor