Rotary encoder is the sensor which could convert the shaft mechanical displacement to digital or pulse signals. On the incremental encoder disc， there are many square holes equally spaced. The rotary encoder could output the pulse signal through the electrical part reading the holes on disc.

An incremental rotary encoder provides cyclical outputs (only) when the encoder is rotated. The incremental rotary sensor 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 position and velocity.