Two-way signals are used in a railway that has trains moving in both directions on the same track. The most common use is at end-of-line stations, where trains enter and exit the same end of the station. In the example at the right, the signals direct the next train to come into the empty loading bay. They also prevent the train from leaving the loading bay if another train is in the way.
If a train has a choice of two or more directions, each with two-way signals on them, it will choose the direction with a green signal. If all signals are red it will pick the easiest direction and wait for the signal to change.
Two-way signal was the very first and only railway signal introduced in the original Transport Tycoon.