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Which sentence is correct?

We process the data in two steps: First, .. Second, ...

OR

We process the data in two-step: First, .. Second, ...

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Two steps means exactly what the the words imply:

We process the data in two steps . . .

There are two steps involved in processing the data.


The hyphenated version doesn't mean two steps at all. A two-step is the term for a particular type of dance:

1 : a ballroom dance in ²/₄ or ⁴/₄ time having a basic pattern of step-close-step
2 : a piece of music for the two-step

So, it would be very unusual for it to not be a mistake if used here. If not a mistake, it would be a deliberate play on words by the author—a way of speaking figuratively about how each step interrelates with the other.

Likely, if it were meant to be taken that way, it would be written more explicitly:

We process the data in a two-step dance . . .


Note that two-step can also be used adjectivally, rather than as a noun.

To demonstrate this, your sentence would need to be rephrased:

The analysis of data is a two-step process.

Here, two-step has nothing to do with the dance, but is simply a different way of phrasing your first sentence: that there is a process that has two steps. The use of the hyphen is stylistic.

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You process the data in

two steps

If you processed the data in

two step

it might be a kind of dance, but you could have a two-step process.

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