is it possible to have a trader tax status and also have long term stock positions subject to a lower capital gains tax rate. must it be held in a separate account?
If held in a separate account, it certainly makes proving it easier. However, if you document each long term stock position appropriately, I believe you can comingle long term positions with your trading account. But for clarity and simplicity, having long term positions in a separate account is ideal.
Adding "Non-475" to the account name would help document the fact pattern that its a separate from trading activities though the IRS could always challenge the position.
Traditionally the IRS won't allow you to cherry pick. That's kind of the point of trader status, but you should consult directly with a tax pro. If cherry picking was allowed there would be very little point in the election of trader status.
You can designate a security as being held for investment i.e. not for trading but it is done so when you purchase the security so the 475 election (or trader election if you prefer to think of it that way) is consistent. The "non 475 account" is the highest form of documenting that sort of intent. Separately identifying in your normal trading account can also work but it is a lower form of evidencing the intent. There's another option for identifying but I can never remember that one. But yeah, once you get into this type of situation, it's better to get a CPA or tax accountant involved.