I've seen some video and articles about setting the correct saddle height. As far as I observed from them and from cyclists on the road, when the pedal is at highest point, the thigh should NOT be horizontal (parallel to the ground), but should be slightly downward (i.e. knee lower than hip). Otherwise I suppose it's harmful to the knee.

In order to do so, however, I have to set my seat very high, the maximum height possible. As a result, not only my knee would be almost straight when the pedal is at the lowest point, but also my feet is very far from the ground when letting my leg straight down from the seat (i.e. my feet could never touch the ground even when the bike is slightly leaned to one side when stopping at a red light: I have to get off the bike completely). And I remember I had hip pains when saddle was set too high and the ride demanded some effort.

So in short, either my seat is too high causing hip pain, or it's too low harming the knees. The point is there is no point where the seat height can accommodate both for me.

What's the problem? Is it my leg proportion unsual (thigh/calf too long/short), or the crank arm is too long for me (which may mean the bike is too big for me?)? Otherwise I feel perfectly comfortable with my bike.