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When you cut carbohydrates out of your diet and focus on protein your body will begin to burn fat for energy, and this process is called ketosis. Normally our bodies use glucose for fuel, but when you cut that out and just give your body protein (or mainly protein) it can no longer rely on glucose... so it goes strictly into fat burning mode. You can test your level of ketosis by using Ketostyx, which you can buy at Walgreens. It's like a little strip that you pee on and the color shows how far you are into ketosis. The waste products of ketosis are called ketones and they're secreted in your urine (hence the pee test).

And yes, it helps a lot! Normally if you severely restrict your calories you'll lose muscle mass along with losing fat. When doing the ketosis approach your body won't cannibalize your muscle. This is what the nurse at my weightloss clinic said.

Anyway, it's all about what you put in your gas tank!