An in-line holographic microscope can be used to analyze a video stream to track individual colloidal particles' three-dimensional motions. The system and method can provide real time nanometer resolution, and simultaneously measure particle sizes and refractive indexes. An assay using the holographic microscope for holographic particle characterization directly detect viruses, antibodies and related targets binding to the surfaces of specifically functionalized micrometer-scale colloidal probe beads. The system detects binding of targets by directly measuring associated changes in the bead's diameter without the need for downstream labeling and analysis.