A position monitoring system comprises a fiducial reference, a tracker for obtaining image information of surgical site, and a computer system with processor, memory, a software program, and access to a database with scan data of the surgical site with the fiducial reference fixed to the site. Uniquely identifiable tracking markers are fixed to the fiducial reference and to a surgical instrument. The computer determines the relative positions and orientations of the markers based on live image information from the tracker, relates and displays on one or more display systems the current position and orientation of the fiducial reference and the surgical implement. The computer further has a database of instrument gestures and corresponding executable functions. When a user manipulates the surgical implement to form a recognizable predetermined instrument gesture, the computer recognizes the gesture in the live image information and automatically executes the corresponding function.
