Are you editing on a laptop or a desktop?
It’s not always necessary to use an external drive, but it is necessary to use a dedicated drive. For example, if you own a Mac Pro, you have four internal drive bays. You could add a second, third or fourth internal drive and dedicate it to video.
With the exception of high performance external RAID systems, which can connect via eSATA, SAS or Fibre Channel, dedicated internal drives are potentially a better option for video storage. When using internal drives, there are fewer components to fail. When external drives fail, it’s often the case that the actual hard drive has not failed, and the external enclosure’s bridge chip or power supply has failed instead.
Additionally, with the exception of eSATA, an internal SATA connection is always going to be faster than Firewire 400 or 800, and there’s no danger of bus contention as each drive has a dedicated connection to the motherboard. Since all Firewire ports on the computer share the same bus (which defaults to the speed of the slowest device connected), it can be problematic to use Firewire video devices (decks, cameras, I/O devices) in conjunction with Firewire storage devices.