The purpose of this thesis is to explain how to properly use technical analysis mainly focused on the FOREX market, although trading concepts explained in this thesis can be applied to every financial market which is traded by charts. The reason for research of FOREX market is because it is one of the most well-known trading markets with biggest trading volume, in this thesis foreign exchange is explained through its functions in every day and as well as trading instrument, which is less known to people. This thesis explains basic principles of the foreign exchange markets, their functionality and purpose. Thesis is composed out of five chapters, and in each of them it is explained through the different approaches of trading and how to properly do trade management with the use of stop losses, trading examples are mostly done on the EUR/USD and GBP/USD pairs. The first chapter explains basic usage and explanation of common terms used while trading such as; major and minor pairs, long position, leverage, pips and others. Through the explanation of the technical analysis process focus is put on the most popular indicators and it includes the usage of RSI, moving averages, moving average convergence divergence (MACD) and Bollinger bands. Each indicator has the graphical example which shows their principles and how it should be traded according to their rules. Trading of any financial markets carries high risk and, due to that reasons, big focus of the thesis is also put on the third chapter which describes how to manage risk using stop losses and risk to reward ratios. Trading carries a lot of advantages and disadvantages, but the successful trader has to recognise certain advantages mentioned and explained in thesis which will help him to trade more successfully.