Add the following lines to the ~/.Xdefaults to get a transparent urxvt terminal:
urxvtdepth: 32
urxvtbackground: 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](http://en.wikipedia.org/wiki/Color_depth#32-bit_color) 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.