Any system that works for you is the right system. I sort by main color for general fabrics of a 1/2 yard or more. I also separate batiks, orientals, holidays, and 30's fabrics. If it's a fat quarter up to a half yard it gets folded with fat quarters. Anything less gets cut into my standard scrap strip sizes and separated into lights and darks. That works for me, but anything that works for you is what you should use.