An incremental rotary encoder provides cyclical outputs (only) when the encoder is rotated. They can be either mechanical, optical or magnetic. The incremental rotary encoder is the most widely used of all rotary encoders due to its low cost and ability to provide signals that can be easily interpreted to provide motion related information such as velocity.
The fact that incremental encoders use only two sensors does not compromise their resolution. One can find in the market incremental encoders with up to 10,000 counts per revolution, or more.
Incremental encoders are used to track motion and can be used to determine position and velocity. This can be either linear or rotary motion. Because the direction can be determined, very accurate measurements can be made.
They employ two outputs called A & B, which are called quadrature outputs, as they are 90 degrees out of phase.