When you are picking out chords there is a pretty systematic approach you can use.
- Find the bass note first (the lowest one). Use just the low E string and go up and down its length for each note. Do this for each chord in the progression and play along with single notes until you are sure you have the bass movement.
- Start with the first chord - Using the bass note you found, try a major chord shape. If that sounds wrong try a minor chord shape... If that sounds wrong try a dominant chord (7) chord shape. 95% of the songs you try it will be one of these three types. I have included a chart below to assist you.
- Do this for each chord until you are pretty sure it is right. Play along with the song... then turn it off and play solo. If one chord sounds off try a different chord type until it sounds good.
- If it sounds right, but you are sliding up and down the neck too much, then find the higher bass notes using the A and D string. Do whatever it takes to get the bass notes mostly in one place. Most guitar parts are positional - meaning they typically are in one area of the neck.
- Apply the chord type you worked out to each bass note in its new location.
Knowing the names, or at least knowing how to figure out the names of the notes on the neck is extremely beneficial. For example, If you found a bass note waaay up on the 8th fret of the low E string. It is very helpful to know that this note is C. As most even beginning guitarists know how to play a C chord in open position. A song with a simple G, C, D chord progression can look like this:
Here is an image of the different chord types as played as a barre chord
(borrowed from: http://home.roadrunner.com/~nils/GuitarChordCharts.htm)
Lastly, the most important thing is patience. MOST people give up WAAAAAYYY too soon. The first few songs you do will be a nightmare. Take a long time. But with each new one you learn some tricks. STAY with it. You CAN do it with some dedication.