Step 2: Throw a horizontal hook.
This step isn't actually that difficult, I just like to act mad hard. Basically, pop the yo-yo up and then swing your throwhand forward away from your body so the string lashes out around to the other side of the yo-yo. Make it pretty! I'm not really good enough yet to make the slow, huge loop, but be sure to make it look as sideways as possible.
...and if you're having trouble working the motion, seriously. Watch Guile throw a Sonic Boom in Street Fighter II. It's the same motion.