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I have a similar setup on my O-Gauge layout using a current sensing device made by Burns MFG. Has worked flawlessly for 15 years.

 

In looking at the diagram if you add insulated outside rails to both sides on the outbound track the train can stop without a relay. No common the train will stop as the video. When the 2nd train hits your insulated rails the wheels will make common and transfer it via the jumper wire to the the double insulated outside rails making common and causing the stopped train to proceed. 

 

Looking back at the the diagram you did what I proposed. 

Last edited by F&G RY
Originally Posted by brwebster:

Beautiful example of what can be done with 3 rails and little else...the true essence of tinplate operation.  I hope to employ stuff like this on some future layout.  I suppose the basic circuitry could be used at diamonds to avoid collisions in a hands free environment.

 

Bruce

For a diamond one would need relays. Still technology that was around in the thirties.

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