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How you do it is also simple - obviously add your drive to your PC. Then at the top left of the UI, click Steam > Settings > Downloads. The page that then shows, right at the top, click on "add library folder".
Add the drive or folder within that drive you want to use. Nag that's it set up.
Now all you need to do is go to your library, right click on a game and move it. It should be readily apparent how to do that (it's under Manage iirc).
You can move them about to your hearts content.
There "can" be problems, if you don't set everything up correctly, but yes, people do use externals with Steam games.
https://support.steampowered.com/kb_article.php?ref=8379-RYIP-2998
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The thread always comes up time and time again about people whose games have appeared uninstalled and they have to completely reinstall it again from people who use external hard drives. Use at your own risk. Furthermore the data transfer rate in external drives is often much lower than internal drives and you may experience performance issues just from that.
Never Start Steam with out the USB drive running .
I speak from experience never failed me in over 2 years
Using A Seagate Expansion Drive 5 TB.
Write speeds is 3 gb a sec or more USB 3
https://www.seagate.com/au/en/support/kb/how-fast-should-an-external-drive-be-172213en/
https://steamcommunity.com/sharedfiles/filedetails/?id=2002472506
https://steamcommunity.com/sharedfiles/filedetails/?id=2077936463
Move Install folder for the games by rightclicking them in Library Properties>Local Files Tab.
Saves and screenshots will remian in their respective folders on your windows Drive.
I have done this for years and I have yet to come across a game that is even noticeably hindered by this.
Granted it does say in Valve's own spiel that it CAN make things slower but I've never seen much evidence of it - less so with USB 3.0 and upward.
I for instance, run a laptop with up to three external drives (all USB 3.1). I have an internal mechanical and an internal SSD. I only use ONE game on the SSD (7 Days to Die). There's no problems I've come across in all the games I've personally tried, and I have a wide range of them.
Will you find a few seconds shaved off load times here and there? Quite possibly. But game performance isn't going to be noticed in all but a few possible exceptions. And my laptop is reasonably speced - it will run any game from the PS4 generation at high to ultra in some cases.
So while it's claimed a lot that these will affect it, no evidence has been forthcoming and I've never personally witnessed it, so it certainly does NOT apply generally.
Oh and Juanitta is correct here - make sure you run Steam with the drive (or drives) already connected as it can cause Steam to go a nd bit wonky and refuse to see the games if you do it the other way round.