Originally Posted by
cny-bikeman
It's best to use loose ball bearings, unless you have a high quality cage that has a complete complement of balls, BUT the open side (where you can see almost the entire bearing) faces the cone, so that no part of the cage is rubbing on a bearing surface.
+1
Loose ball bearings are much better for hubs and bottom brackets, since it's quite easy to install them loose. Installing loose bearings into the bottom race of a headset is a bit harder, because you have to flip the bike to do it easily. But even there, installing loose bearings is usually worth it, because it will often make the headset smoother. I've switched caged to loose bearings and made an old headset MUCH smoother.