Null modems are a way of connecting 2 DTEs together without using a modem - we are nulling out the modems. This gives way to the term Null Modem. When 2 DTEs are connected together, the TXD Pin2 of one DTE is crossed to Pin 3 RXD of the other DTE. We also have to fool the DTEs into believing that they are connected to DCE devices. This is done by crossing the control lines as follows:
Notice that RI (Ring Indicator) and CD (Carrier Detect) are not used when connecting directly from DTE to DTE. They are a function of a telephone system and by nulling out the modems, we've eliminated the telephone system. This can cause problems when transferring files directly because most communication programs detect loss of carrier (CD) as a disconnect command. The communication program will abort the data transfer if CD is not present. This can usually be over-ridden by de-selecting "Transfer Aborted if CD Lost" (or something similar) in one of the communication software configuration menus.