I'm basically playing with an Xbox controller, but this type of game requires more precise controls than an analog stick, since i'm really bad at using one to do precise inputs, and the digital analog of the xbox is REALLY bad.

what controller do you guys use to play this game?

I'm using a DualShock 4, using the d-pad. I'm considering getting an arcade stick, I have all these fighting games in my library just begging for one :D

I'm using a PS2-Controller and the d-pad there (same as above). I've looked into getting an arcade stick myself recently but what's on offer here is rather bad.

I'm using an X-Box One/Win 10 controller.

Logitech Gamepad F310 and wired Xbox 360 controllers have worked well for me. I'm used to the stiff 360 D-pad so it doesn't bother me too much. The F310's is a little wiggly, but it works.

I have noticed that if I start a new Arcade game and adjust the volume with my keyboard before the character selection screen comes up, it thinks my keyboard is controller 1, and I have to restart the game to get it out of the sequence.

Since I really don't like the xbox360 d-pad (also the A button at the moment is busted) I use an arcade stick I got for cheap back when I really got into MAME (I was not an arcade kid but I was rediscovering stuff, especially beat 'em ups), only thing is the douple tap directions are more difficult to do with the stick.