It is well known that real-time pattern recognition and tracking can be accomplished with optical correlation. The performance of a particular correlator depends mainly on the capability and availability of real-time spatial light modulators. Recently, twisted nematic liquid crystal (TNLC) devices have been used as spatial light modulators. To date, most of the correlator systems use these liquid crystal devices in either a joint transform correlator or as the input spatial light modulator in a Vander Lugt correlator system. This paper discusses the design considerations of a gray-scale converging beam correlator system using liquid crystal devices at both the input and the filter planes. The optical properties of twisted nematic liquid crystals pertaining to their use as a SLM are discussed. To date, all of the pixelated liquid crystal devices are addressed by video signal. A gray scale video addressing scheme is presented. In addition, the design of a real time converging beam correlator utilizing liquid crystal devices from an Epson Video projector is presented along with results that characterize its performance.