Your knees should be slightly bent at the bottom of the pedal stroke, so that your hips do not rock side-to-side while pedaling, at all. The suggestion to try lowering your seat a quarter inch is a good one, as are all the others: Lose the denim jeans, make sure you have a quality saddle with a cutout (I like the Selle SMP TRK), experiment with saddle fore/aft position and tilt, and take breaks off the saddle as needed until you toughen up.

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