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To turn a video file into a looped GIF, trim the video first by setting the end of the work area to the part that can be looped. You can preview where to trim and use the loop playback option to check how it looks. By reducing the work area to a shorter period of time, you can create a seamless loop. In the tutorial, the creator trims a 12-minute video down to 2 minutes to achieve the desired effect with a time-lapse video, showcasing a rhythmic pattern of lights and moving cars.