Carrying different coloured yarns as you knit is a common technique used in Fair Isle knitting, which involves alternating between two colours every few stitches. Also known as stranding, carrying the unused colour behind your work allows you to pick it up easily the next time you need it. Stranding also allows you to change to a new colour without cutting the old colour and leaving an end that must be woven in later on.
Knit until you come to the point where you want to add a second colour, or follow your knitting pattern until it instructs you to change colours.
Bring the new strand of colour up from under the old colour and wrap it around your needle to complete your next stitch.
Continue knitting until you need the first colour again.
Drop the second colour you were using and pick up the first colour from the back of the work if you are on a right side knit row, or from the front of your work if you are on a wrong side purl row.
Pull the stitches on your right needle apart a little to space them out. Stretching the stitches like this helps prevent you from pulling the next stitch and the carried yarn too tightly and bunching the fabric.
Complete the next stitch with the new colour and continue on until you need to switch colours again.
Repeat steps 4 to 6 to work with two yarns and carry the unused yarn along the wrong side of the work.
To work more efficiently with two colours, you can hold one colour in your left hand and the other in your right instead of dropping each colour after you use it. Knit the strand from your left hand in Continental style and the strand held in your right hand in English style.
If you need to carry the second colour for more than half an inch (or about five to seven stitches), this will create a very long strand or "float" on the back side of your work that can sag and cause your stitches to loosen. You should anchor the float on the back side every few stitches by wrapping the strand of the first colour around the second colour before you make your next stitch. This way the first colour crosses over the float and holds it firmly against the back of your work so it doesn't sag.