Abstract: Virtual power plant which is the aggregation of distributed energy resources,is capable of engaging in transactions within the energy and peak regulation markets. A trading strategy that enables virtual power plants to actively participate in these markets is proposed. Fiestly, a transaction framework is developed for the virtual power plant participatimg in the energy and peak regulation markets. Then,the energy and peak regulation response model of flexible load is constructed,and a stepped compensation demand response mechanism considering peak-valley transfer deviation is proposed for the transferable load, with the aim of guiding transferable load to participate in demand response while improving the revenue of the virtual power plant in the peak regulation market.Finally,the master-slave game model between the virtual power plant and the flexible load is constructed,and the Nash equilibrium between the profit of the virtual power plant and the electricity cost of the flexible load is solved by the combination of particle swarm optimization and Gurobi. The case study shows that the proposed demand response mechanism can fully tap the response potential of transferable load and increase the profit of virtual power plants in the day-ahead market.