Photoshop Tutorials: Add Transparent Type To An Image
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Once you've sampled a color to use for your Outer Glow, click OK in the top right of Photoshop's Color Picker to close out of it and return to the Outer Glow options in the middle column of the Layer Style dialog box. Increase the Opacity of your Outer Glow all the way to 100%, then increase the glow Size to around 20 pixels:

Click OK when you're done to exit out of the Layer Style dialog box. Here's my image so far:

We could end here if we wanted, since we now have our transparent text effect and it does look more interesting than if we had simply lowered the type layer's Opacity value as we did back near the beginning of the tutorial, but let's take things further.
Step 6: Set The "Fill" Value Back To 100%
Go back up to the top right corner of the Layers palette and set the type layer's Fill value back to a full 100%:

This is going to temporarily fill your text with white again:

Step 7: Change The Type Layer's Blend Mode To "Overlay"
Another way to make text transparent in an image is to change its blend mode. By default, a layer's blend mode is set to "Normal", which basically means "nothing special". The type layer is just sitting there and not really interacting with the image below it in any way, but we can change that. Go up to the Blend Mode options in the top left corner of the Layers palette, directly across from the Opacity option. Click on the down-pointing arrow to the right of the word "Normal" and choose Overlay from the drop-down list that appears:

Now look at the image. The text has become transparent once again but it's also picking up the colors from the image below it and making everything brighter, giving us a really nice effect:

If you find that the Overlay blend mode is too intense with your image, try "Soft Light" instead, which gives the same yet much more subtle effect.
Again, we could stop here, but let's finish things off by giving our transparent type just a bit more definition.
Step 8: Add An "Inner Glow" Layer Style To The Type
Click back on the Layer Styles icon at the bottom of the Layers palette and this time, choose Inner Glow from the list:

Once again, Photoshop will bring up the Layer Style dialog box, this time set to the Inner Glow options in the middle column. Just as we did with the Outer Glow, let's sample a color from the image to use for our Inner Glow. Click on the color swatch directly below the word "Noise":

Photoshop's Color Picker will appear and again we're going to ignore it, since we're going to sample a color directly from the image. Move your mouse cursor over the image and you'll see it change into the Eyedropper icon. Click on a dark color in the image to sample it. We want a dark color because we're going to be changing our glow into a shadow, so make sure you sample a color that's nice and dark. I'm going to sample a dark blue color from my image:

Once you've sampled your color, click OK in the top right corner of the Color Picker to exit out of it and return to the Inner Glow options in the Layer Style dialog box. To change our Inner Glow into an Inner Shadow, all we need to do is change its Blend Mode at the top of the options from "Screen" to Multiply by clicking on the down-pointing arrow to the right of the word "Screen" and choosing "Multiply" from the list. As soon as you change the blend mode, you'll see the shadow appear just inside the edges of your letters. Lower the Opacity value of the shadow down to about 40% so it's not so intense, and finally, increase the Size of the shadow to around 18 pixels:

Once you've changed the options, click OK to exit out of the Layer Style dialog box, and you're done!
Here, after adding a little more definition to my transparent type with an inner glow, is my final effect:

And there we have it! That's how easy it is to add transparent type to an image in Photoshop!
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