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Flow Control
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The FT245R, FT2232C (in FIFO mode) and FT245BM chips use their own handshaking as an integral part of its design, by proper use of the TXE# line. The FT232R, FT2232C (in UART mode) and FT232BM chips can use RTS/CTS, DTR/DSR hardware or XOn/XOff software handshaking. It is highly recommended that some form of handshaking be used.

There are 4 methods of flow control that can be programmed for the FT232BM device.

1.None - this may result in data loss at high speeds  

2.RTS/CTS - 2 wire handshake. The device will transmit if CTS is active and will drop RTS if it cannot receive any more.  

3.DTR/DSR - 2 wire handshake. The device will transmit if DSR is active and will drop DTR if it cannot receive any more.  

4.XON/XOFF - flow control is done by sending or receiving special characters. One is XOn (transmit on) the other is XOff (transmit off). They are individually programmable to any value.  

It is strongly encouraged that flow control is used because it is impossible to ensure that the FTDI driver will always be scheduled. The chip can buffer up to 384 bytes of data. Windows can 'starve' the driver program of time if it is doing other things. The most obvious example of this is moving an application around the screen with the mouse by grabbing its task bar. This will result in a lot of graphics activity and data loss will occur if receiving data at 115200 baud (as an example) with no handshaking. If the data rate is low or data loss is acceptable then flow control may be omitted.