How to run Boot Camp on External Hard Drive?

I use my mid-2012 11" MacBook Air for gaming and school work. My hard drive is filling up fast, and I was hoping I could use an external hard drive and Boot Camp to run Windows for my games, thus freeing up most of my hard drive.

My questions are:

1) Is this possible?

2) What equipment would I need to do it?

3) What would I be looking for in an external hard drive for this purpose?

4) If I did this, would I be able to unplug and replug my external hard drive without causing a problem?

5) What version of Windows should I use?

The program I will be using for my games is Steam.