The current invention is intended to be installed in revenue service railroad tracks to detect railroad cars exhibiting wheel set lateral instability. The invention utilizes an array of inductive proximity sensors mounted at regular intervals in a section of railroad track. Each proximity sensor is oriented to sense the lateral position of railroad car wheel sets. The invention employs a computer algorithm to extrapolate the trajectory from the set of proximity sensor signals for each wheel set. A second algorithm evaluates the shape of the trajectory to detect oscillating lateral motion of the wheel set. A third algorithm assesses the severity of any wheel set lateral oscillations that are detected. An additional function of the invention is to detect railroad car trucks that exhibit “tracking errors”.