Sequence number
Binary coding
Gray coding
Channel B
Channel A
Channel B
Channel A

1

2

3

4

0

0

1

1

0

1

0

1

0

0

1

1

0

1

1

0

Table 1—When you compare the outputs of the 2-bit binary and Gray code rotary encoders, 
you notice that only 1 bit changes per sequence number in the Gray Code.