zanor said:
Yes, I meant infinite turns. Do you know where I can get one of those? Or any information on this?
Panel encoders produce two output clocks that are 90° out of phase with each other (i.e., quadrature encoded). As you described, you can turn them infinitely in either direction and, as you do so, they will output clock pulses.
The direction of turning can be detected by means of the phase relationship between the two clocks, and the "distance" through which you have turned is determined by the number of clock pulses that occur for each direction.
You can interface a panel encoder to a µcontroller or to a hardwired quadrature decoder. In either case, what you end up with is a counter that indicates the effective position of the encoder shaft. When you power down the instrument that employs this encoder, you can save the counts to non-volatile memory. When you power up the instrument, you can restore the counter to its last value from the memory.
How to control something with the counts? Typically the counts value is written to an analog-to-digital converter of some sort, if you are controlling some analog circuitry. For example you could control volume by writing counts to a dac that controls a programmable gain amplifier. There is no requirement, though, that you are controlling an analog process; the counts could be kept in the digital domain as well, depending on the application.