At least one embodiment is directed to a tracking system for the muscular-skeletal system. The tracking system can identify position and orientation. The tracking system can be attached to a device or integrated into a device. In one embodiment, the tracking system couples to a handheld tool. The handheld tool with the tracking system and one or more sensors can be used to generate tracking data of the tool location and trajectory while measuring parameters of the muscular-skeletal system at an identified location. The tracking system can be used in conjunction with a second tool to guide the second tool to the identified location of the first tool. The tracking system can guide the second tool along the same trajectory as the first tool. For example, the second tool can be used to install a prosthetic component at a predetermined location and a predetermined orientation. The tracking system can track hand movements of a surgeon holding the handheld tool within 1 millimeter over a path less than 5 meters.
