The idea of indexing is to orient the spark plug's grounding electrode so it does not shroud the spark from the majority of the combustion chamber's volume. This photo is of an indexing tool made by Moroso. Years ago I used this tool for getting a bit more power from my small block Chevy for local drag racing.
When the cylinder heads are off, screw the spark plugs into each combustion chamber until one is positioned so the plug's grounding electrode is near the chamber's roof. Then remove it and screw it into the tool. Stamp the cylinder number into the tool where the grounding electrode 'points'. This tool allows you to then choose subsequent spark plugs that will correctly orient in each cylinder when the heads are back on the engine. There is a finite amount of combustible fuel in each cylinder for the power stroke. Spark plug indexing's intent is to maximize that combustion. The photo shows 1 through 8 stamped for each cylinder of my V8.
The amount of benefit you'll get depends on the configuration of the combustion chamber. I found it made about a 10 HP difference in a 400+ HP small block Chevy. A hemispherical combustion chamber engine probably wouldn't get that much of a bump. I'm new to Porshe 914's and the Type 4 engine (one was given to me if I could get it out of the woods) and I haven't even removed the engine yet.
Indexing is easy to do when the cylinder heads are off and it can't hurt...
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