Aside from the five standard email folders that come with every Windows Live Hotmail account (inbox, junk, drafts, sent, and deleted items), you can create your own folders (and now also create subfolders). The standard folders are automatically sorted in the order we just gave you, and remain that way, but you can move and sort your own custom email folders by leveraging Hotmail's "automatic sorting" feature, as you'll learn in this tutorial.
Now that Hotmail lets you create subfolders, you can move folders inside other folders simply by making them subfolders when you create them. And all folders will be listed and sorted in alphabetical order, by name. This means that the way you name folders determines their order with respect to one another (and you can always rename folders). The screenshot below shows how naming your folders and subfolders a certain way will automatically move them to a position of your choice:
You can re-sort and move the order of your email folders ("top level" folders) by naming them a certain way: starting the folder name (or renaming it) with a special characters like underscore ("_") will move that folder to the top of the listing; numbers are then moved below, and lowercase and uppercase letters come next; so, to move a Hotmail folder to the bottom of the listing, simply make its name start with the letter "z", optionally followed by one or more spaces.
Because the name we picked for test subfolders are exactly the same after the first character, this first character alone determines how folders are moved around; but you can use second and third characters to get even more control on how folders are moved in the listing. Likewise, subfolders are sorted alphabetically within the folder that contains them. Once you come up with your own naming convention, you'll be able to move (and most importantly find) your folders and subfolders very easily!