The Keyes KY-040 rotary encoder is a rotary input device (as in knob) that provides an
indication of how much the knob has been rotated AND what direction it is rotating in.
It’s a great device for stepper and servo motor control. You could also use it to control
devices like digital potentiometers.

Features:

The Keyes KY-040 rotary encoder is a rotary input device that provides an indication of how much the knob has been rotated and in which direction it is rotating.
It can be used for stepper and servo motor control, as well as devices like digital potentiometers.
The module is designed so that a low signal is output when the switches are closed and a high signal when the switches are open.
The high is generated with a 5V supply input and pullup resistors, such that CLK
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are both high when switches are open.
It also has an integral push button switch that can be used for changing switch function, such as switching between coarse and fine adjustments.