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Whether you want to invest in crypto or shares; risk management is always important when investing. That is why many investors use the various indices in the stock market, which are also known as ETFs. For example, the S&P500 ETF is a very popular investment among many investors. But did you know that you can also trade indices on the crypto market?
For example, you can trade in various indices via the exchange FTX. There are also so-called crypto indices on the stock market, where, for example, blockchain-related companies are put in a basket. However, with the current range of FTX you can also get started on the crypto market itself.
The word “index” has several meanings. The simplest meaning of index is that of ‘list’. We discuss the meaning of an index with a view to investing: the stock market index. In investing, the index consists of a collection of stocks or bonds of different companies. The number of companies included in the index varies per index. There are also indices based on business location, stock market value or industry. What they have in common is that the stocks or bonds collectively determine the index.
A perpetual contract is a special type of futures contract, but unlike the traditional form of futures, it has no expiration date. So you can hold a position as long as you want. For the rest, trading in perpetual contracts is based on an underlying index price. The index price consists of the average price of an asset, according to the major spot markets and their relative trading volume.
Thus, unlike conventional futures, perpetual contracts are often traded at a price equal to or very similar to spot markets. However, during extreme market conditions, the market price may deviate from the spot market price. However, the main difference between the traditional futures and the perpetual contracts is the “settlement date” of the former.
You can use different indexes via FTX. There are obvious indices, such as the Altcoin Index and DeFi Index. However, FTX goes beyond the expected indices. They also have the Shitcoin Index. In the list below you can discover the different indexes, which we will look at in more detail later in the blog.
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