fellytone84:
@shpaget, I'm not familiar with reed switches, but they sound interesting -- I'll check them out.
Reed switches are two springy metal pieces sealed inside a glass tube. When a magnet is brought near, the two metal pieces are attracted to each other and make contact.
My solution is to place the reed switches just under the track (the small ones are easily hidden) and attach a magnet to the underside of the loco. Use the Arduino to detect when the switch closes so it can slow/stop the train. The reed switches should be placed at right angles to the track
You can also use reed switches to differentiate between different (stopping and non-stopping?) trains.