Does anyone know when the chain needs adjusting? If so the how tight does it have to be?

When it's loose (or too tight if improperly adjusted) It should have 1.5-2 inches slack. Don't ignore this or you'll be buying chains and sprockets faster than you go through tires

1.5-2 inches? Now how do i measure that theres that much leway?

Like this :yesnod

thanks guys

You also want to measure slack while sitting on the bike. You should have about 3/4 in of slack with the bike under load. Or you can get one of these
http://www.chain-checker.com/

The correct chain tension is paramount to the way your gearbox behaves. My last R1 was particularly bad between first and second, but if I kept the chain tension correct, there was no problem.