Real transparency in urxvt

Add the following lines to the ~/.Xdefaults to get a transparent urxvt terminal:
urxvt*depth: 32
urxvt*background: rgba:0000/0000/0000/dddd

The depth option tells urxvt to use 32 bits to define a color. Generally a color is represented as 24 bits (8 bits each for Red. Blue and Green). We add 8 more bits to store the Alpha(transparency) information. More info

Then we set the background option to denote the 4 different color information : Red/Blue/Green/Alpha.

To change the shading change the Alpha value in background option. 0000 = full transparent and ffff = no transparency.

For e17 users: Use the bling module for composite effects.