If you want to experiment with traditional color knitting techniques, such as Scottish fair isle knitting or Norwegian selbu knitting, you must learn to color strand. Color stranding allows you to knit with two colors of yarn and create a color work pattern across a row. Correctly stranding yarn when knitting with multiple colors of yarn does take some practice -- knitters new to stranded color work might find that their finished knitted fabric puckers. Despite the learning curve, learned stranded knitting techniques can produce stunning results.
Hold the dominant color of yarn in your right hand and hold the secondary color in your left hand if you're knitting English style. You'll knit by pushing the tip of the right needle through the front of the first stitch of your left needle, wrapping the yarn in your right hand around the tip of the right needle from front to back, and pulling the right needle tip and the yarn back through the loop to create a new stitch.
Hold the dominant yarn in your left hand and the secondary color in your right hand if you knit Continental style. You'll knit each stitch by sliding the tip of the right needle through the front loop of the first stitch on your left needle, wrapping the tip of the needle around the yarn held in your left hand and pulling needle and yarn back through the loop to create a new stitch.
Float the unused yarn across the back of your work as you knit in another color -- floats are the strands that travel across the work's back side. The floats should stretch easily over the back of the fabric without pulling. Hold the dominant color in your right hand and hold the secondary color in your left hand. Be careful not to give floats too much ease, as this will create loops of yarn along the back of your knitted piece.
Weave in unused yarn if you need to float it for more than 5 stitches. Knit a stitch and twist the unused yarn over the working yarn and knit another stitch to secure the float to the back of your work.
Weave in sparingly, as it may allow the unused yarn to show through the front of your work.
You can try holding both yarns in one hand when knitting stranded color work, but unless you are a skilled color work knitter, chances are you'll end up tangling yarn held in the same hand.