Atkins diet is great for losing weight unless you consider yourself an endurance athlete. Endurance athletes rely heavily on large glycogen stores. While on the Atkins diet your glycogen stores will shrink. This will probably only be an issue for you if you typically run for longer than 45 min's at a time. You really shouldn't see any muscle loss on the Atkins diet because you're ingesting so much protein, especially if you're lifting.
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