Three popular technical indicators many traders use are - the Relative Strength Index (RSI) Average Directional Movement (ADX) and Parabolic SAR.What they may not know, is that all of these indicators were designed by one individual: J. Welles Wilder JR and appeared in the ground breaking book “New Concepts in Technical Trading” which was published back in 1973. Welles Wilder was an innovator in the field of trading indicators and is seen as one of the most influential technical anyalists of all time – Let's take a look at Welles Wilder and his trading techniques in more detail.

Welles Wilder began his working life as a mechanical engineer, then he moved into real estate development. He was part owner of company which built apartments and mobile home parks in North Carolina and Virginia and made enough money, to be able to retire in the early 1970s and study the markets and today, is seen as a true legend in terms of his work in technical analysis.

Forex Trading Indicators

In terms of his indicators, if you include them in your currency trading strategy you will have warnings of tops and bottoms, with an indicator such as the RSI, where you can trade divergences in price from momentum. You will have a great indicator in the ADX, which can give you how strong a trend is as well as being able to warn you of turning points. The Parabolic Stop and Reverse indicator can be used to exit your trades better and is a great way to trail a stop loss, when your following a trending market. If you want to time your trading signals better, you need to study these 3 indicators.

I don't use just Wilder's indicators, they work best when combined with others in my trading strategy - but I read New Concepts in Technical Trading when it first came out over 30 years ago and I still use his indicators today which shows how highly I value Wilder's work.

As a Technical Innovator

Forbes Magazine (October, 1980)

Welles Wilder is "the premier technical trader publishing his work today."

Barron's (July 1984)

"In 1978 the basis of mathematical analysis was expanded when J. Welles Wilder, Jr. published New Concepts in Technical Trading Systems.

Financial World (July 1985)

"Over the years, Wilder has developed more accurate commodity trading systems and concepts than any other expert."

Technical Analysis of Stocks and Commodities (February 1986)

"It's not often that truly original discoveries are made in technical market analysis. J. Welles Wilder, however, lays claim to an entire collection of systems that have reshaped contemporary commodities trading and analysisť

Wilder has written three trading books and a review of them and my comments are below:

Books

New Concepts in Technical Trading Systems, Trend Research, McLeansville, NC, 1978.)

In this book Wilder published six technical trading systems. The three considered most important and still use by traders today are - the Directional Movement Index (ADX), the Parabolic Stop and Reverse and the Relative Strength Index (RSI). This book established Wilder's reputation as one of the world's leading technical analysts and the concepts the book discusses and the indicators, have stood the test of time and have been used by millions of traders worldwide

Comment: This is simply a book all traders should have in their collection.

The Adam Theory of Markets or What Matters is Profit, Trend Research, McLeansville, NC, 1987)

The Adam Theory is about what makes a successful trader and shows why the ideas possessed by many traders prevent them from making profits in the markets. The book comes to a very simple, but compelling conclusion about trading - the Adam Theory is revealed. Of course, you will not enjoy the book as much if I were to reveal the secret in this article! I am sure you already know what it is but maybe you do not appreciate its importance.

Comment: What is the Adam theory? You need to read the book!

The Delta Phenomenon, The Delta Society International, McLeansville, NC, 1991)

The Delta Phenomenon or The Hidden Order in all Markets

This order, the Delta Phenomenon, is the basis of all market movement relative to time. It is the basis of all technical analysis. It is the most basic thing about markets. It is the beginning point. All other methods of technical analysis pale when compared to the fact that there is perfect order in all markets. As you will learn, the Delta Phenomenon is perfect. That is, it always follows the defined discipline that rules it. I have solved the Delta Phenomenon for many different markets over hundreds of years of data and I have never seen a failure in this order.

Comment: I don't believe in order in the market so this is the one work of Wilder which I didn't really like but that said, his other work is essential education for any trader.

Final Words

The trading techniques Wilder developed and his indicators are simply essential for any trader to learn and he is one of the greatest technical analysts ever and years ahead of his time – a true market legend.