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The first stop signal is required to be placed so as to protect the trains in the station and trains coming into the stations as well. It is therefore necessary that the signal is placed before any train stabled at the station. The best location of placement of this signal is therefore just in front of all connections of the station.
To ensure that trains approaching the stations do not overshoot and lead to collision the first stop signal is normally placed sufficiently before the first junction. In Railway parlance the first stop signal should be placed at a distance equal to the Block overlap for the signaling system in rear of the first facing point. This will ensure that the first stop signal will not only protect all trains in a station and will also allow for some level of failure of the drivers to stop well behind the obstruction.
To understand the implication of this if we consider Fig 3 the signal S5 is the first stop signal. The point P1 is the location of obstruction to a train approaching signal S5. When signal S5 is at Red even if the signal is overshot the point the train will be expected stop before this point if there is enough distance between Signal S5 and P1. Such distances beyond a signal are refereed to as overlaps and depending on the policies of Railway operations can vary.

In conventional Railway operations two types of overlaps are identified
a) Block overlap which is the distance required between the first stop signal in a station and a point of potential obstruction. This is the overlap required when approaching signal whose authority of control is with different authorities.
b) Signal overlap which is the distance between a signal and a point of potential obstruction beyond it when the signal from which it is being approached it is with the same authority.
The block overlap is obviously longer than the signal overlap as it is expected that the when the control is with the same authority the chances of keeping an obstruction beyond a signal to which a train has been allowed to come will be less.