Do you know how the control room knows the position of the train on the track?
And how the signal system knows which light (red or green) is on??

The answer is because of the track circuit. Through the circuit which is installed on the track, it can detect the train is on which tracks then make proper arrangements.

Theory:
The track will be divided into different portions to from a block by cutting out the steel from the track. The 2 ends of the steel of the block will be grounded to form an independent circuit. When there is no train passing through the block, current will flow from the power supply to the steel track and then to the relay. So, the connection point of the relay move up and make a connection with the green light and complete the circuit as shown below:

When there is a train entering the board, the circuit will be shorted. Because there is no current passing through the relay, the connection point of the relay will move downward and connect the circuit of the red light. The red light lights up so as to stop another train to enter that board. And the diagram shown below:

When the train pass out the board, the relay will again move up to connect the green light circuit and this indicates that that board is clear and train can pass through.

Fail Safe
Why we need to use the train axis to short the circuit? To use the train axis to connect to the circuit so that the relay connection point to solely connect to the red light, isn't it better? Although this method conserve energy, if one part of the circuit is out of order and the power is cut, then if that block already has a train on the track, because there is no current pass through the relay to make it magnetize, the connection point of the relay can't make a connection with the red light circuit, this makes the ride not 100% safe. Fail safe aims at when the system is out of order, the security system can still function as normal. Just like the above diagram, when there is an accident occur, no matter there is a train on the track in that block or not, the relay will still magnetize and connect to the red light circuit to ensure safety.

Jointless Track circuit
Just like the track circuit but the main different is that JTC use electrical signal instead of the current. Electrical signal is generated by the signal generator and received by the signal receiver. If there is a train pass through, the electrical signal will pass through the train axis to short the circuit. So, the receiver can't receive signal and this indicates that there must have a train.

Axle counter
Sometimes the humidity environment(like the tunnel)will affect the track circuit to send out an incorrect signal. Moreover, the track circuit can't detect the direction of the train, so that some blocks will install a axle counter for supplementary. The East railway use a pair of Track mounted SK30c balanced magnetic flux transmitter/receiver (TxRx) wheel detector head and a proccessors(CPU) which is installed in the aluminium yellow cast. Each block * needs 2 axle counters( install in the beginning and at the end of the block).

*Sometimes install the axle counter is to increase the route capacity so that sometimes the block will install more than 2 axle counters. eg the Kowloon Tong station and the Shatin station install a multiple section axle counter.

The use of the proccessor is to count the number of trains passby and to determine the direction of the train through detecting the increase or decrease of the number of train axle.

Figure: Axle Counter

Figure: Axle counter of East Rail (sensors & CPU)