Rotation sensor/tracker

I'm trying to build a wheel that can rotate and as it does, the arduino can keep track of what position of the wheel is currently facing down and in turn trigger different events depending on the position of the wheel.

What circuit components would I need to implement to realize this? Thanks!

Shaft encoder. There are two types: incremental (cheap, but need to be "homed" every time the system is turned on) and absolute (can be expensive).

Telll us more about the wheel, dimensions, how it is rotated, how fast, how many angular positions need to be resolved, etc.