TFS 2012 Velocity chart

Here I will explain what is it the velocity chart in TFS 2012 shows. Generally - velocity shows how much a team can do during a sprint.

So it comes to - how do you estimate effort. IN TFS 2012 we use User Stories, and for estimates - Story Points. This is essential to remember. Look here, an example of velocity chart:

First of all, on X-axis - iteration ordered by time. This means you have to set timeframe for your iterations. For this go to admin page and Iterations tab.

Y-axis. See numbers? Those are story points. If your work items do not have story points - they will not appear on this chart.

Now about colours. Green shows work items in Resolved\Completed\Done state. Blue - Active. Other states are not shown.

Hope that clarifies some things.