Who Is J. Welles Wilder? The Engineer Behind RSI and ADX

J. Welles Wilder Jr. was the engineer turned trader whose 1978 book set out RSI and ADX, and on 28 Phemex crypto perpetuals from 2024 to 2026 the buy signals his ADX filter kept closed higher 20 days later 25.7% of the time, against 44.4% of all days. The same book also covers ATR and Parabolic SAR.

His ADX system, in ChartSchool's account, makes ADX above 25 the first requirement and buys when +DI crosses above -DI. From July 2024 to October 2026 that filter kept 179 buy signals across the 28 markets, and the buys it rejected did better over the next 20 days. Sell signals told the opposite story.

J. Welles Wilder at a Glance

Who Is J. Welles Wilder?

Stocks & Commodities magazine introduced Wilder in a March 2009 interview as "an author, market technician, and inventor of indicators and trading systems". It counted the relative strength index and average true range among the basics of technical analysis that come from his work.

His math needs only a bar's high, low and close. That lets the Welles Wilder indicators run on a Bitcoin perpetual the same way they ran on the commodity charts he designed most of them for, and Phemex Academy walks through how to trade Bitcoin with the RSI indicator on BTC's own chart.

Wilder has no live website of his own, and his Wikidata record lists no official site. His work survives in StockCharts' ChartSchool indicator pages and in the Stocks & Commodities archive.

What Was J. Welles Wilder's Career?

Wilder came to markets from engineering and property. The magazine's interviewer cited his degree in mechanical engineering from North Carolina State University, along with his earlier work as a real estate developer before trading.

Trading produced the book that made his name. Trend Research published New Concepts in Technical Trading Systems in 1978, according to the Internet Archive's catalog record of the book.

ChartSchool says his indicators were "developed before the computer age" and "continue to be applied by chart analysts", and Stocks & Commodities calls the book "his most famous work".

Stocks & Commodities marked his death in its August 2021 issue, where an editor's note gives the date as 18 April 2021.

Who Invented the RSI Indicator?

Welles Wilder did, and anyone asking who invented RSI gets the same answer from ChartSchool. Its RSI page calls RSI "a momentum oscillator developed by J. Welles Wilder" that "measures the speed and change of price movements", and it notes that Wilder features RSI in his 1978 book.

The Welles Wilder RSI divides average gains by average losses over 14 periods, "the default Wilder suggested in his book". It then turns that ratio into a line between zero and 100, and ChartSchool reads a value above 70 as overbought and one below 30 as oversold.

Because each average carries every earlier price forward, ChartSchool says a formula needs "at least 250 data points" to match its own RSI numbers.

Later traders built new tools on his oscillator. Phemex Academy covers Stochastic RSI for overbought and oversold RSI levels, a version that measures RSI against its own high and low over a set period.

What Is Wilder's Moving Average?

The Welles Wilder moving average is the smoothing that runs inside RSI and ATR as well as ADX. ChartSchool's RSI page gives the rule as the previous average times 13, plus the newest value, all divided by 14. It calls this "a smoothing technique similar to calculating an exponential moving average".

So each new bar you add gets a weight of 1/14, about 7.1%, and the old average keeps the rest. A standard exponential moving average gives its newest bar 2/(N+1), which means Wilder's 14-period average matches a 27-period EMA. That's why it turns more slowly than a 14-period EMA, which weights the newest bar at 13.3%.

A single bar's weight halves only about every nine bars. The slow decay has a cost, and ChartSchool says Wilder's smoothing means it "can take around 150 periods of data to get true ADX values".

Who Invented the ADX Indicator?

Wilder also created the ADX. ChartSchool's ADX page says he "features the Directional Movement indicators in his 1978 book", a family that pairs the plus and minus directional indicators (+DI and -DI) with the Average Directional Index.

The two DI lines tell you which side has the edge. In ChartSchool's words, ADX "is used to measure the strength or weakness of a trend, not the actual direction".

The page says Wilder saw a strong trend above 25 and no trend below 20, and it calls the space between them "a gray zone".

His trading system made ADX above 25 the first requirement and took a buy when +DI crossed above -DI. ChartSchool adds that "Wilder based the initial stop on the low of the signal day."

ChartSchool's ADX page carries its own warning. "Setting an ADX requirement will reduce signals, but this uber-smoothed indicator tends to filter as many good signals as bad," it says. It also notes that ADX "has a fair amount of lag because of all the smoothing techniques".

Does Wilder's ADX Filter Work in Crypto?

For buy signals in this window it didn't. On 28 Phemex crypto perpetuals from July 2024 to October 2026, 46 of 179 Directional Movement buy signals with ADX above 25 closed higher 20 days later, against 44.4% of all days. That 25.7% came in a mostly falling stretch for these markets.

The filter threw out 711 buys with ADX at or below 25, and 333 of them closed higher (46.8%). Those discarded buys beat the ones it kept by 21 percentage points. That goes further than ChartSchool's warning that the filter drops good signals along with the bad.

Sell signals with ADX above 25 did better, as 125 of 187 closed lower 20 days later against 55.6% of all days. The 693 sells at or below the filter's line closed lower 54.0% of the time, close to the base rate.

Wilder's stop rarely survived. The signal-day low broke within 20 days on 147 of the 179 filtered buys (82.1%), against 86.9% for an ordinary day's low.

The gap held when the settings moved. At a 10-day horizon the filtered buys rose 34.2% of the time against 46.4% of all days. At 30 days it was 30.7% against 44.8%, and a threshold of 20 gave 32.5% against 44.4%. In 23 of the 28 markets the filtered buys did worse than that market's own days. The other five edged above theirs, on six or seven signals apiece.

One BTC signal shows a high ADX carried over from Bitcoin's fall into July 2024. Bitcoin's +DI crossed above -DI on 15 July 2024 with ADX at 37.4, well inside Wilder's strong-trend zone, at a close of 64,690. The price traded up to 70,040 on 29 July, broke the signal-day low of 60,630 on 3 August and closed 4 August at 58,140, 10.1% under the signal close.

Method: daily bars from Phemex's own market data for 28 crypto perpetuals with complete records from February 2024 to the late-October close. Settings follow ChartSchool, with 14 periods and Wilder smoothing after 150 warm-up bars. A buy is +DI crossing above -DI, and the filter is ADX above 25 that day. Each signal from July 2024 to early October 2026 is scored on its close 20 days later.

This is a past record from one mostly falling stretch, and it isn't a rule for the next signal.

What Else Did Welles Wilder Create?

Wilder's 1978 book features Average True Range beside RSI and ADX. ChartSchool's ATR page opens with "Developed by J. Welles Wilder, the Average True Range (ATR) is an indicator that measures volatility".

It says he designed ATR with commodities and daily prices in mind, so gaps and limit moves count in its range. The page adds that "ATR doesn't indicate price direction, just volatility."

Parabolic SAR, his stop-and-reverse system, rounds out the four indicators ChartSchool lists from the 1978 book.

He designed the Swing Index too, according to Phemex Academy's guide to the Accumulative Swing Index (ASI) indicator, a variation built on that index.

From the 1980s his focus moved to market turning points. Stocks & Commodities says Wilder founded Delta Society International, "expounding the theory of the delta phenomenon in the 1980s". In the interview he summed the idea up as "All markets have a perfect order in five different time frames".

The magazine credits him with four books. Besides New Concepts, the other three are The Delta Phenomenon and Adam Theory of Markets, along with Wisdom of the Ages in Acquiring Wealth.

How Can Traders Use Wilder's Indicators on Phemex?

Each Wilder tool answers its own question on a chart. RSI gauges momentum, ATR sizes the typical daily range, and ADX tells you how strong a trend is without saying which way it runs. You can run all three on the same daily bars with Wilder's 14-period default.

RSI also has short-term offshoots, and Phemex Academy's guide on how to use the Connors RSI to trade crypto covers one built for quick swings.

Bitcoin's 14-day ADX stood at 17.08 at the late-October close on Phemex's BTCUSDT perpetual, under the 20 line that ChartSchool says Wilder used for no trend. That reading failed the first requirement of his system, so his rules would have taken no BTC trade at that close.

The BTCUSDT perpetual runs up to 150x leverage and settles funding every 8 hours. Futures use leverage, and a leveraged position is closed automatically if losses reach its margin.

Frequently Asked Questions

Who developed the relative strength index?

Welles Wilder developed the relative strength index and featured it in his 1978 book, New Concepts in Technical Trading Systems. ChartSchool describes RSI as a momentum oscillator that moves between zero and 100, with a 14-period default.

What is Wilder smoothing?

Wilder smoothing is the averaging rule behind his RSI and ATR as well as ADX. Each new value carries a weight of 1/14 while the old average keeps 13/14. That matches a 27-period exponential moving average, so it reacts more slowly than a 14-period EMA.

Who invented the ATR indicator?

Welles Wilder developed the Average True Range and featured it in his 1978 book. He built it for commodities, whose gaps and limit moves a plain high-low range misses, and it measures volatility with no view on direction.

What is New Concepts in Technical Trading Systems?

It's Welles Wilder's 1978 book, published by Trend Research. ChartSchool says it features RSI and ADX along with ATR and the Parabolic SAR system, and Stocks & Commodities called it his most famous work.

Disclaimer: This article is for informational purposes only and is not financial advice. Cryptocurrency trading involves substantial risk. Always do your own research before making investment decisions.