An optical encoder may include an encoder disk, an illumination system, and a detector to detect light diffracted from the encoder disk. The encoder disk may include a signal track comprising a diffraction grating, and an index track comprising a reflective index mark, wherein a width of the index mark is larger than a pitch of the diffraction grating. An indexing method may include providing an encoder disk, providing an illumination system to direct light to the encoder disk, providing a detector structured to detect light diffracted from the encoder disk, calculating an estimated count of quadrature states from a rising edge of an index pulse to a middle of the index interval, and calculating the quadrature state at an approximate center of the index pulse. A dynamic parameter correction method may include calculating a target gain and offset and correcting values based on the target gain and offset.