A mechanical engineer who decided emotion itself could be engineered out. His one self-published book —«New Concepts in Technical Trading Systems», 1978 — gave the world RSI, ATR, ADX and the Parabolic SAR: four of the most-used tools on every terminal on earth.
Born in Norris, Tennessee in 1935 and raised in Greensboro, North Carolina, John Welles Wilder Jr. trained as a mechanical engineer and made his first fortune in real-estate development — then sold out and turned the same mind to the commodity markets.
Trading commodities, he found the charts full of adjectives and empty of numbers. So he built his own instruments — testing by hand, refining by rule — until emotion had a formula pointed at it.
He self-published «New Concepts in Technical Trading Systems» — six mechanical tools in one thin book: RSI, ATR, ADX/DMI, Parabolic SAR, the Swing Index and the Commodity Selection Index. Traders bought it by mail for $65.
The RSI became the most-referenced indicator in technical analysis; ATR quietly runs position sizing and stops across the industry. Wilder later founded the Delta Society and died in New Zealand in 2021 —his formulas outliving every fashion since.
The Relative Strength Index compresses the balance of up-closes and down-closes into one bounded number, 0–100. Above 70 the advance is stretched; below 30 the decline is. Not a trade signal — a thermometer for the crowd’s fever.
The Average True Range asks one practical question: how far does this market normally travel? Stops set inside that distance are donations. Position size, stop width, target realism — all start from ATR.
The ADX answers the question every other tool assumes: is there a trend here at all? Above ~25, trend tools earn their keep; below ~20, ranges rule and breakouts lie. The filter comes before the signal.
Wilder’s insight: a day’s real travel must include the overnight gap. True range = the greatest of high−low, |high−prior close|, |low−prior close|. Average it — that is the market’s stride.
A stop 0.3 ATR away is inside the market’s normal breathing — it will be hit by noise. Professionals quote stops in ATRs (1.5×, 2×) so the exit lives outside ordinary motion.
Fix the account risk (say 1%), divide by the ATR-based stop distance — the position size falls out as arithmetic. Volatile market, smaller size; quiet market, larger. Emotion never votes.
Rising ADX above ~25: a real trend — trade breakouts, hold winners, trail wide. ADX under ~20: a range — fade edges, take profits fast, distrust every breakout. One number decides which playbook is open.
Stop-And-Reverse: a trailing stop that accelerates with time. Its message is Wilder’s philosophy in miniature — a trend must keep paying you, faster and faster, or you leave. Time itself is a cost.
Wilder’s deeper gift is not any formula but the stance: define entry, exit and size before the trade, in numbers, so the person who executes is not the person who hopes.
RSI prints 78 while price grinds to a new high. What does 78 actually mean?
Price makes a higher high; RSI makes a lower high. This is…
ADX reads 12 and flat. The right playbook is…
Every Wilder tool exists to replace a feeling with a reading: fear of missing out becomes an RSI number, panic becomes an ATR-sized stop, stubbornness becomes a SAR exit.The system is not smarter than you — it is calmer than you, and in markets calm compounds.
«Some traders are born with an innate discipline. Most have to learn it the hard way.»— J. WELLES WILDER
Open any charting platform: RSI, ATR, ADX, SAR — four defaults from one 1978 book.Homma read the crowd, Dow mapped the tide, Wilder gave both a number — and with him, the nine foundations close: from candlelight in Sakata to formulas on silicon.