Why does bike size is important?
It is clear that wearing a shirt two sizes too small would be uncomfortable, and wearing a shirt two sizes too large wouldn't be good either. In the same way, riding a wrong size bike will fit badly and make you uncomfortable, too. There are two main problems, one obvious and one a little more subtle.
The first big problem with a bike that doesn't fit is saddle height. You need the saddle to be just high enough to give your legs the right extension when you pedal. Too low and your legs stay bent too much all the way around; this doesn't use your leg muscles well and you wear out quickly. Too high and you rock back and forth on the saddle as you pedal, very uncomfortable. Either extreme (too high or too low) can also be very hard on your knees.
Saddle height is adjustable, of course, and if the bike frame is at least close to the right size, you'll be able to adjust the saddle to the proper height. If the frame is a lot too small, you can usually overcome this problem by buying a longer seatpost to move the saddle back up to where you want it. (But that causes other problems we'll talk about soon.) If the frame is much too large, you won't be able to drop the seat far enough to be usable, and there is no practical way around that problem.
The saddle on a bike can be adjusted up and down several inches, even as much as a foot if you consider replacing the original seatpost with a longer one. But the handlebars can't be moved nearly as far as saddles can. Most handlebars can be adjusted up and down or forward and back only two inches or so, and even this small change is often a complicated operation of replacing parts, not just loosening a few bolts.
This can lead to all sorts of problems. If the handlebar is too far away from the saddle, you have to bend down further and reach far out to grab the bars. This puts more weight on your back, arms and hands, which is uncomfortable. Having the handlebar too close to the saddle is less of a problem, but in extreme cases it can cause your knees to bump the handlebars when you are standing up to climb a hill. Having the handlebar a lot lower than the saddle is similar to having it too far away-you have to bend far over and reach further to grab the bars, an uncomfortable position. Having the handlebars high up is not a big problem, except that sitting upright slows you down. Your legs aren't as strong when you are sitting up, and that position causes more wind resistance when riding fast or into a wind.
Bike size has a big effect on handlebar position. If the frame is too small, you'll have to push the seat up high to fit your legs. You won't be able to move the handlebar up as much, so it will be a long reach back down to grab the bars, and your back will be quite bent over. If on the other hand the frame is too large, the bars will be up high but might be too far forward (since the frame gets longer as well as taller).
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