[HomeBrew] Shaft encoder lesson

[Richard Blackman]

Greetings to all on list.
I am in need of your expertise regarding mechanical shaft encoders.
I am building a DDS VFO project and it calls for a mechanical encoder with 
three pins.
Output A, Com, Output B. so far so good.
I already own an optical shaft encoder, but I do not know how to adapt it to 
the circuit.

Question:

When I go to the Digikey site to order  a mechanical "Grayhill"  encoder, I 
find they come in different flavours, such as hexadecimal, 2 bit, grey, and 
quadrature. I have no idea what I need.

The encoder will feed a 16F628,    A to  RA0,  B to RA1  and com to RB4

Please-  what is the difference between the encoder types?  Am I asking a 
question that takes a textbook chapter to answer?
any comments appreciated

Richard  VA3NDO