# Trading Strategy on NFTperp

By [Arsenii](https://paragraph.com/@arsenii) · 2024-06-28

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Trading on NFTperp involves understanding how to use the Automated Market Maker (AMM) system effectively. Here’s a comprehensive guide on forming a trading strategy using NFTperp’s AMM:

1.  Choose Your Pair: Start by selecting the pair you want to trade. Each pair consists of an NFT and a base token like WETH (Wrapped Ethereum).
    
2.  Define Your Range: Determine the minimum and maximum price range for your position. This range will dictate how your position reacts to price movements. A narrower range increases capital efficiency but also risk.
    
3.  Position Dynamics:
    

Center of Range: When the mark price is at the center, your position balances equally between long and short, creating a delta-neutral stance relative to WETH. Above Center: As the mark price moves above the center, your position shifts towards a short stance. If the price exceeds the maximum range, it converts to a market order, leaving you with an open short position. Below Center: Conversely, if the price drops below the center, your position shifts towards a long stance. Exceeding the minimum range converts it to a market order, resulting in an open long position. 4. Managing Risk:

Capital Efficiency: A tight range can be more profitable within the specified limits but poses higher risks if prices move out of this range. Impermanent Loss: This occurs when the mark price exits your defined range, converting your position to a long or short. Be prepared for potential losses if prices move unpredictably. 5. Earning Rewards: By providing liquidity, you can earn fees and additional $VNFTP rewards, enhancing your overall returns.

1.  Monitor Market Movements: Stay updated with market trends and adjust your ranges accordingly. Active management of your positions can help mitigate risks and capitalize on opportunities.
    
2.  Security Measures: Ensure you use secure wallets and enable two-factor authentication (2FA) to protect your investments from potential security threats.
    

By understanding and utilizing these elements, you can develop a robust trading strategy on NFTperp, balancing between risk and reward while navigating the dynamic NFT market.

For more detailed information, you can check out the NFTperp AMM Guide.

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*Originally published on [Arsenii](https://paragraph.com/@arsenii/trading-strategy-on-nftperp)*