One of the worst things Microsoft has ever done (and there have been many!) was to use the same name ('Outlook') for two entirely different things.
When you say that you 'use Outlook' you could mean that you're using the email client which most businesses use(i.e. a special program, entirely separate to your web browser, just used to send and receive emails) or you could mean that you're using Microsoft's web-based email system (Outlook.com) through your web browser (Internet Explorer, Edge, Firefox, Chrome or whatever). So some guesswork is required here in order to advise you!
However your reference to Hotmail (which was the precursor of Outlook.com) strongly suggests that you're accessing your mail via the Outlook.com website, so Alix Xedjhidee M's reply here should be the one you need:
http://answers.microsoft.com/en-us/outlook_com/forum/oemail-osend/how-to-rearrange-existing-folders-hotmailoutlook/7690ea3e-0999-473d-b0f0-f24d183bd121?auth=1
So, as Douglas suggests, dragging-&-dropping really ought to solve the problem. If you're sure that it doesn't, please confirm that you're using the Outlook.com website (and not the program called 'Outlook') and also tell us which browser you're using.