Follow the instructions in Video Effects to add a Green Screen video effect. To configure the effect, with the Video Effects dialog open, click on the clip preview to choose the color to remove. You can do this when the cursor hovering over it changes to an eyedropper icon. Alternatively, you can use the color picker control on the left side of the dialog to choose a color more precisely. Change the Threshold and Fading values to adjust how similar a color has to be to the selected color for it to be removed. Selecting Color in the Based on: dropdown will remove color in the video based on how closely it matches the chosen color. Selecting Color + Brightness in the Based on: dropdown will remove color in the video based on how closely it matches the color and brightness of the chosen color. Selecting Auto in the Based on: dropdown will attempt to automatically switch between Color and Color + Brightness based on the chosen color. However, for best results it may be necessary to manually choose one of the other options. This is useful when you need to apply a green screen effect to a video with a bright white or dark black background.
As the Threshold value increases, the Fading slider will have less and less of an effect (i.e. when the Threshold slider is full, the Fading Slider will have No effect).
The Feathering parameter is used to apply a "soft edge" or alpha channel blur to the foreground image. This is useful if you have some leftover green pixels on the keyed image, if you soften the edges then these pixels will not be as noticeable when you substitute in a new background. Note that this option can be relatively slow if you choose a large Feathering value.
For best results, the background to be removed must be a very consistent color (e.g., without highlights or shadows), and the background color must not appear on actors or objects which you don't want to remove.
To assist in fine-tuning the key, the Show Alpha Mask option is provided. When enabled, the "alpha" channel or transparency layer of the previewed clip is displayed in black-and-white. This lets you see precisely which regions are being keyed out (black) and which are left untouched (white). If Fading or Feathering is applied you may see semi-transparent regions on the resulting frame, which will display as a greyish color. Seeing the keyed and unkeyed regions in black-and-white is handy for spotting minor keying errors that may not be so obvious otherwise.