The equation above shows that you are limited to making changes to the amplitude, frequency, and phase of a sine wave to encode information. Frequency is simply the rate of change of the phase of a sine wave (frequency is the first derivative of phase), so frequency and phase of the sine wave equation can be collectively referred to as the phase angle. Therefore, we can represent the instantaneous state of a sine wave with a vector in the complex plane using amplitude (magnitude) and phase coordinates in a polar coordinate system.
In the graphic above, the distance from the origin to the black point represents the amplitude (magnitude) of the sine wave, and the angle from the horizontal axis to the line represents the phase. Thus, the distance from the origin to the point remains the same as long as the amplitude of the sine wave is not changing (modulating). The phase of the point changes according to the current state of the sine wave. For example, a sine wave with a frequency of 1 Hz (2π radians/second) rotates counter-clockwise around the origin at a rate of one revolution per second. If the amplitude doesn't change during one revolution, the dot maps out a circle around the origin with radius equal to the amplitude along which the point travels at a rate of one cycle per second.
Because phase is a relative measurement, imagine that the phase reference used is a sine wave of frequency equal to the sine wave represented by the amplitude and phase points. If the reference sine wave frequency and the plotted sine wave frequency are the same, the rate of change of the two signals' phase is the same, and the rotation of the sine wave around the origin becomes stationary. In this case, a single amplitude/phase point can represent a sine wave of frequency equal to the reference frequency. Any phase rotation around the origin indicates a frequency difference between the reference sine wave and the sine wave being plotted.
Up to this point, this white paper has described amplitude and phase data in a polar coordinate system. All the concepts discussed above apply to I/Q data. In fact, I/Q data is merely a translation of amplitude and phase data from a polar coordinate system to a Cartesian (X,Y) coordinate system. Using trigonometry, you can convert the polar coordinate sine wave information into Cartesian I/Q sine wave data. These two representations are equivalent and contain the same information, just in different forms. This equivalence is show in Figure 3.