Let us suppose a trader is having 1lakh in his trading account and he buys 1 lot of nifty future that is for 60000rs which is 10% of the actual value of the contract and goes long on the trade. let us assume that next day nifty suddenly dropped 15% due to technical glitch( october 6th 2012) and recovered with in short span. Then what will the risk management system(rms) do? whether it will close the positon(because margin requirement condition is not satisfied) or ask the trader to pump in some more money(because there is enough cash in the account to provide cushion to the trade) and what if the trader cannot access the markets at that moment to pump in cash.
For the above scenario, assume if the market goes further down, if the trader looses 80% of the capital, it may auto square off the position.