First, read this tutorial if you haven't installed the Imagelys Plugin for Photoshop.

You can apply Watercolor effects to your images files very easily with Photoshop Elements. For Mac and PC only.

This tutorial uses one filter named Painterly FAA 14 from the Imagelys Filter Library.

With Photoshop Elements, in the main menu, click to open and choose an image file.

Now, in the main menu, choose the Imagelys Picture Lab plug-in.

Now, the Imagelys plug-in is active. Do not close this dialog box till the end of process.
Wait the launching of Imagelys Picture Lab software.

The picture appears in the Imagelys Picture Lab work space. Then, click the ToolPalette.

Now, in the ToolPalette, click the category of filter you are interested in, then click one of the effect icons (Painterly FAA 14).

Then, in the Filter Parameters dialog box, you can adjust parameters of the Painterly effect.
Now, click to Apply this filter settings to the image.

After a little while (the rightmost portion of the status bar shows the progress), the rendered effect will be displayed.
Now, you can click the Validate button for validate your work and return to Photoshop Elements.

The result is showed into Photoshop Elements.
First, in the main menu, choose Filter Gallery.

Then, in the panel, choose Artistic and the Watercolor effect. Now, click the OK button.

Then, click to Save as in the main menu and enter a filename.