Caboose Industries makes a ground throw with contacts that can be used for powering switch frogs or a green and red LED in signals.
Jay
C-415 Build: https://imageshack.com/a/tShC/1
Other builds: https://imageshack.com/my/albums
Track detection can be as complex as any Rube Goldberg dream, or as simple as a LED in series with the train power circuit (works on DC, but only for standing trains.)
Signal indication of turnout position can be had by incorporating an electrical switch into whatever throws the points. My manually controlled signals are driven by a simple linkage connected to the handle of an electrical switch below track level at the fascia line. (I prefer to keep the meathooks out of the scenery...)
Chuck (Modeling Central Japan in September, 1964)
This should get you started:
http://waynes-trains.com/site/Signals/Model-Railroad-Signaling.html
Elmer.
The above is my opinion, from an active and experienced Model Railroader in N scale and HO since 1961.
(Modeling Freelance, Eastern US, HO scale, in 1962, with NCE DCC for locomotive control and a stand alone LocoNet for block detection and signals.) http://waynes-trains.com/ at home, and N scale at the Club.
What you're asking about is "track detection". Several companies offer products to do what you want. RMC, Model Railroader, and other mags usually have ads for them. You can also do a search in the Walthers website or catalogue, or check out the NMRA website.
It basically comes down to two types. One is infrared or other optical devices. The train passed over a detector causing a shadow, or breaks a beam of light and that throws a relay or other gizmo that changes a signal from green to red. The other detects the current flow in the track, and when it detects an engine, lighted car, or a car with one or more resistors connecting the metal wheelsets, it changes the signal.
A Yahoo / Google / Bing search on "model railroad signal detection" will yield a LOT of usefull links.
LION has signals on his railroad. But him has 14 miles of scale track, and since it is a subway layout it needs lots and lots of signals. On NYCT they are about 300' apart.
Yes of course I want them to light, but no I do not want to buy 200 detectors. The poor little LION is not an electronics genius and so him powered these signals with 12c three position switches. I can set up the signals for photo shoots, but have not worried about them being correct at all times. It would be nice and I keep thinking of what I can do without all of the expensive electronics which I will never own. Even 200 relays would be a little too pricy, but maybe I can get a deal on them. Some signals are connected electronically to the turnouts, so even if the turnouts are not powered, the position of the points can be indicated on the signals.
The Route of the Broadway Lion The Largest Subway Layout in North Dakota.
Here there be cats. LIONS with CAMERAS
Check out http://www.logicrailtech.com/ They have IR systems that can work on either a timer or until you trip the IR switch at the other end.
I am planning my next HO scale layout and I am wondering if and how you could install working signals that show if a track is occupied or not. The thing is i don't want to install switch motors or a dispatchers control stand. I will not have many people to operate my layout (i have no problem with that) so i don't need anyone to be a dispatcher or control switches. The switches will be operated by hand. So does anyone have any info, tips, or help?