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binary - How is overflow detected in two's complement?

I see that when I subtract positive and negative number using two's complement I get overflows. For example, if I subtract 1 from 2 I get:

2 = 0010
1 = 0001 -> -1 = 1111
2 + (-1) -> 0010 + 1111 = 10001

So here the result has fifth left bit 10001 - is it overflow? I've found these rules for detected overflows with two's complement:

If the sum of two positive numbers yields a negative result, the sum has overflowed. If the sum of two negative numbers yields a positive result, the sum has overflowed. Otherwise, the sum has not overflowed.

Can anyone please elaborate on these and show example?

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Let's start with an answer to your title question.

How is overflow detected in two's complement?

Overflow rule : If two numbers with the same sign (both positive or both negative) are added, then overflow occurs if and only if the result has the opposite sign.

But you ask something different on the body of your question after your example.

So here the result has fifth left bit 10001 - is it overflow?

No! there is no overflow here. That fifth bit is the carry/borrow. Carry if you are talking about addition. Borrow if you are talking about subtraction.

Overflow occurs when the number that you trying to represent is out of the range of numbers that can be represented. In your example you are using 4-bits two's complement, that means you can represent any number in the range -8 (1000) up to +7 (0111). The result of your subtraction 2-1 is +1, a number that lies within the range of representation.

When we add a negative and a positive operand, the result will always be in the range of representation. Overflows occur when we add two numbers with the same sign (both positive or both negative) and the result has the opposite sign.

Most of misunderstanding surrounding carry-out and overflow comes from the fact we use the carry-out as one of the parameters to generate overflow flag. They are strongly related but they are not the same thing.

When adding numbers in two's complement, if the carry-out and the carry-on into the most significant bit (sign bit) are different that means an overflow has occurred.

Let's see two negative operands with a positive result:

-8 + (-1) = -9 

 1000  (carry)
  1000 (-8)
+ 1111 (-1)
------
  0111 (+7) OVERFLOW!

The carry-out is 1 and the carry-on to sign bit (MSB) is 0.

And now, an example of two positive operands with a negative result.

+7 + 1 = +8

 0111  (carry)
  0111 (+7)
+ 0001 (+1)
------
  1000 (-8) OVERFLOW!

The carry-out is 0 and the carry-on to sign bit (MSB) is 1.


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