This is a good question and one ive been asked many times and I did try to explain this in the video by mentioning how to work out the firing order but really this is much easier if you have the WPS500X.
As easy as it is to explain its hard to put into words so here we go.....
The easiest way to put this is the Pico Diagnostics software is looking at the 'Battery Signal'.
If we think of the Alternator output, although this is coupled to the Crankshaft via the 'Auxillary Belt', it is not timed or keyed as there is no real need for a direct relationship in timing plus we know that the belt could slip but again this doesnt really matter plus now we have smart charge etc.
Also if you think of the size of the Crank Pulley respective to most Alternator Pulleys, the Alternator is geared to rotate much faster.
This means that the output of the Alternator is basically proportional to when the engine starts to rotate and the position it stops in, not cylinder specific.
The software therefore has no idea where the alternator is in relation to the engine as all it sees is an Alternator Ripple Signal, so what the software does is to look at the signal and interpret the results.
In this example i did disable cylinder 1 when doing the video but the software doesnt know this. What the software does know is that there is a problem and it represents the scale and magnitude by giving the correct level of percentage in the displayed results.
If you know the offending cyinder then by using the firing order you can quickly work out which is which. This isnt really handy as the point of the test is to prove a cylinder but its useful if you have more than one offending cylinder or if your working on 'V' engines or engines situated deep into the bulk head i.e. High Performance cars making removal of spark plugs impossible without removing the engine or a diagnosing a banked Cylinder Head to remove i.e. 'V' engines.
The purpose of this test really is to provide a quick method of compression testing without any mechanical effort i.e. removing Spark Plugs, Ignition Components and fitting compression gauges. This test will very quickly tell you if you have a problem and the scale of the problem.
All you need to remember is the results diplayed are in engine firing order but not as shown in the software i.e. Cylinder A could be Cylinder 1, 2, 3 or 4 and so on.
Channel B Sync Signal
You can use Channel B of the PicoScope as a reference marker and looking at the raw signal. If you use the Spark or Injector Signal, say on Cylinder 1, this will put that signal above the Ripple Signal and from there you should be able to see the offending cylinder with firing order (See image below). What you need to do is to 'Right Click' on th graph area and click on the 'Signal' box and this displays the 'Raw Data for both channels.
Its hard to make out so ive added the file as an attachment so you can download it. This is a bit unique as this vehicle had a cam sensor that gave the output of 1, 3, 4, 2 so its easy to work out the firing order with the cylinder contributions however you can do the same with an Injector Signal or Spark as this will give you a marker every forth cylinder thus allowing you to see the dropped cylinder and working out which one it is.
As I mentioned earlier you can also use the WPS500X Pressure Sensor to do a 'Absolute Compression Test'. This will give you a reference as it will show a 'P' to show the location of the sensor on the displayed results then by using the firing order again you can determine which cylinder has the lowest output.
Then you can move on to do a 'Running Compression Test' - See Video http://www.picoauto.com/support/topic9133.html or a 'Cylinder Leakage Test' to find the cause of the problem.
I hope this helps to answer your question