1. Open Photoshop. Create a new file with transparent background. Draw circle with Shift and Elliptical Marquee tool. Fill it with color. (Everyone should have a totally different color from anyone else.)

2. Make one layer copies of the original layer. Fill it with different color. You will get the following layer structure.

3. File > Jump To > Image Ready 3.0

4. Select the first frame. In the Animation Palette click the small triangle at right top (marked with red circle).
5. Click Tween. The dialog box will appear. Select the number of frames you want to add for animation. Check the Opacity option ON. Click OK.

6. Check the performance in the browser
File > Preview In > Click the browser you want

7. Save the file with
File > Save Optimized or File > Save
Optimized As