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  3. /Index Price
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trading

Index Price

An average price derived from multiple exchanges, used as a reference for derivatives trading.

Definition

An average price derived from multiple exchanges, used as a reference for derivatives trading. The index price helps prevent manipulation since no single exchange can skew it significantly. Perpetual swap funding rates are calculated based on the difference between the perp price and the index price.

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Related Terms

Mark Price

A calculated fair price used by exchanges to prevent unnecessary liquidations from short-term price manipulation.

Perpetual Swap

A derivative contract similar to futures but with no expiration date.

Funding Rate

A periodic payment between long and short traders in perpetual futures markets that keeps the contract price close to spot price.

Accumulation Phase

A period when smart money quietly buys up an asset before a major price move.

Annualized Return

The average yearly return on an investment, calculated to account for compounding.

Arbitrage

Profiting from price differences of the same asset across different markets.

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