J. Welles Wilder, Jr.

J. Welles Wilder, Jr., was born in the town of Norris, TN, during the Great Depression but grew up in Greensboro, NC. His working life started as a mechanical engineer but he also ventured out into real estate development. After his partners bought him out of his real estate business in 1972, Wilder turned his attention to commodities market.

J. Welles Wilder, Jr., focused on developing mathematical formulae that would lead to profitable trading systems in highly leveraged securities. The bulk of his endeavors were revealed in his book entitled New Concepts in Technical Trading Systems, which was published in 1978 and established Wilder's reputation as a leading technical analyst. The book remains an important reference for both stock and futures traders and introduced six technical indicators that Wilder used as standalone technical trading systems. These were:

Of these, the DMI, the Parabolic SAR, and the RSI became the most significant.

J. Welles Wilder, Jr., also published The Adam Theory of Markets or What Matters is Profit in 1987 and The Delta Phenomenon in 1991, as well as several articles on trading. in addition, Wilder made several appearances on radio and television programs, and conducted technical trading seminars in Asia, Australia, Canada, USA, and Europe.

Average True Range (ATR)

Average True Range

Average True Range (ATR) is a volatility indicator developed by J Welles Wilder and is used to measure the volatility of a security's price movement and is based on absolute values rather than percentages. It was originally developed for use in trading commodities, which are frequently subject to gaps and limit moves. ATR takes opening gaps, limit moves, and small high-low ranges into account when determining what should be the 'true' price range of a commodity.

Although the ATR was designed for commodity trading, it can also be used to identify the ...

Relative Strength Index (RSI)

Relative Strength Index
Relative Strength Index

The Relative Strength Index (RSI) is one of the most useful momentum indicators around and is one of the most widely used oscillating indicators. The RSI determines overbought and oversold conditions by compares the magnitude of a security's recent gains to the magnitude its recent losses.

RSI is calculated using the formula: RSI = 100 - 100/(1 - RS) where RS is (Average Gain) / (Average Loss) for the specified period. However, Average Gain and Average Loss are not true averages as they are divided by the period of the RSI. The RSI varies between 0 and 100 ...

Recommended Reading: