Exercise and calories

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i have been on a 1200 calorie/day diet for about 3 weeks now. I have been using 1200 net as the goal using exercise to negate additional calories. If I want to eat 500 calories of pizza then I have to exercise 500 off. Is the net approach wrong? Or should I be doing something different? I haven't taken measurements but I do appear to be a bit smaller and I know that the number on the scale isn't supposed to matter but it does and mine hasn't moved for 3 weeks and I have recorded every morsel and drop that has gone into my face!