Measure with a 12" ruler. On a new chain it should line up exactly in the middle of each roller. This distance only grows larger as the chain wears. Some people call this "stretch", which is a misnomer. It isn't stretching. It's wearing.

1/16" past the 12" mark is usually a good time to start changing the chain. At 1/8" you're probably looking at a whole new drivetrain.