Sheldon Brown wrote:
he chain tension on a fixed gear is quite critical, and is regulated by moving the rear axle back and forth in the forkends. If the chain is too tight, the drivetrain will bind, perhaps only at one angle of the pedals (chainwheels are not usually perfectly concentric). It should be tight as it can be without binding. If the chain is too loose, it can fall off, which is quite dangerous on a fixed gear.
Set the rear axle so that the chain pulls taut at the tightest part of the cranks' rotation. One at a time, loosen up each of the stack bolts, and tighten it back just finger tight. Spin the crank slowly and watch for the chain to get to its tightest point. Strike the taut chain lightly with a convenient tool to make the chain ring move a bit on its spider. Then rotate the crank some more, finding the new tightest spot, and repeat as necessary.
This takes a little bit of your hands' learning how hard to hit the chain, and how loose to set the stack bolts, but it is really quite easy to learn.
Tighten up the stack bolts a bit and re-check. Tighten the stack bolts in a regular pattern, like the lug nuts on a car wheel. My standard pattern is to start by tightening the bolt opposite the crank, then move clockwise 2 bolts (144 degrees), tighten that one, clockwise 2 more, and so on. Never tighten two neighboring bolts in a row. You may prefer to go counterclockwise, but try to get in the habit of always starting at the same place and always going the same way. This reduces the chances of accidentally missing a bolt.
Once you have the chainrings centered and secured, adjust the position of the rear axle to make the chain as nearly tight as possible without binding. Notice how freely the drive train turns when the chain is too loose. That is how freely it should turn when you are done, but with as little chain droop as possible.