Dial that looks like a potentiometer

While salvaging a broken stereo I came across what appeared to be a potentiometer behind the volume knob. The only difference appeared to be that it could turn infinitely in both directions. I hooked it up like a pot, with hot on one side, ground on the other, and an LED on the wiper. I was very surprised to find that the LED would blink every time I moved the knob a tick.

The problem is that the behavior appears to be the same when I move the knob clockwise or counterclockwise, so I don't know how I would actually use it with the arduino. Does anyone have any experience with these and/or know how they work?

Picture of the dial:

That is a rotary encoder.
There playground articles on using them.

I'm looking at articles on rotary encoders, and I think mine may be a bit different. Instead of the ouputs staying connected between ticks like in rotary encoder demo part 1 - YouTube, it just blinks very rapidly right at every tick.

That display looks proper to me, just showing the two encoder channels outputting a classic 'grey code' output sequence.

Lefty

That video shows what I'm expecting to happen. On mine, both LEDs blink right when I turn it another tick. By default they're both off.

zonedabone:
That video shows what I'm expecting to happen. On mine, both LEDs blink right when I turn it another tick. By default they're both off.

Well I would have to see how you have it wired up in schematic form. Pull-up or pull-down resistors are required.

Lefty