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I believe @amey is going to race a S/R 1.42 with a 70mm stem so the 53 should be fine. And chapeau for the plan raising the saddle on the smaller frame. A shorter crank you have to lower the saddle accordingly.
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In regard to the sizing, the 53cm FM296 have the stack of 534mm and the reach of 376mm.
The Trek Domane, for example, in the 54cm size have 575mm stack and 374mm reach, a full 41mm higher, and 2mm shorter.
It's also higher than the 55cm FM296 by 25mm.
Basically, TL:DR, the 54cm Domane have the headtube of a 56cm, but the reach of a 52cm.
I recently had a bike fit and I was recommended a 54 c-c top tube with a 90mm stem and 77 cm between the top of my saddle and the center of the bb. Turns out I have massive knee overlap as well so I need lots of setback (seatpost recommendations?). I'm thinking about buying an FM296 from Hongfu. Now if I were to buy one should I get the 55 with an 80 mm stem and roughly 180 mm post showing or a 53 with a 100 mm stem, roughly 210 mm of post showing and a spacer stack? Will the slacker seat angle of the 55 help against my knee overlap? Also, do longer cranks help against knee overlap?
NB: I was fit using the Serotta method.