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For two months so far I'm trying to fix my bike. I bought a used bike and the shifting was not good. So I bought new cables and tried to make the rear derailleur work, but without any kind of luck. The front derailleur worked, except the rear. I'm not able to understand its mechanism. I have a very weird rear derailleur and non of the youtube videos is helping me because they all illustrate new rear derailleurs.

So my questions are:

1- How does this rear derailleur work?

2- How to install the cable for it?!

When I push the part illustrated in the picture, then the derailleur moves. However I don't understand how the cable makes that part moves. Because it doesn't move, regardless how high I make the tension in the cable!

enter image description here

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    You are missing the cable housing, which the cable runs inside. The cable housing is also holds its form, to some degree, which supports the cable and helps it move smoothly. – Rider_X Sep 26 '15 at 15:33
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    The derailer cable, properly installed, does not directly make the derailer move forward/backward, but rather makes it move in/out. Any motion forward/backward is due to moving to a larger/smaller cog and the chain hence getting tighter/looser. (As others have said, you need a cable housing so that the force of the cable is between the two parts that move the derailer in/out.) – Daniel R Hicks Sep 26 '15 at 17:37
  • Looking at your photo, it appears that your barrel adjuster may be missing. If so, you'll need to get one before you have a place for the cable housing to "land" on the derailer. – dlu Sep 26 '15 at 18:15
  • Also based on your photo, there might be too many links in the chain. It shouldn't be touching itself after passing over the lower jockey wheel, and you're not even pictured on the smallest cog. But get the cable housing sorted first. – Criggie Sep 27 '15 at 4:22
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As you noticed the derailer moves when you push at the arrow. That is the spot where the rear cable housing sits. In the photo below the rear cable housing is the black loop that runs from the bracket on the chain stay just forward of the dropout to the barrel adjuster on the back of the derailer.

The housing is flexible, but it doesn't compress (much), as a result when you pull on the cable the housing presses where you were pressing with your finger and moves the cage to shift. All you need to do is to add a length of housing similar to the one in the photo.

If you have a length of housing you can cut it to fit. There are cutters that are designed for cutting bike cables, but if you don't have them you can use regular side cutters or a hack saw. After cutting look carefully at the cut and and use a pointy device to open up the hole where the inner cable goes. Sheldon Brown has a post where he describes how to cut cables. If you don't have indexed shifters (and it looks like you probably don't) you can use helical cable which will be a bit easier to cut and clean up the ends.

One thing I can't tell for sure from the photo is if there is a stop for the cable or a barrel adjuster on the derailer. Usually there will be a part called a barrel adjuster where the loop by your arrow is (in the photo below it is the silver part where the black cable housing ends at the derailer) that lets you fine tune the derailer adjustment. Some of them thread into a tapped hole in the body of the derailer, others use a nut on the threads of the barrel as a stop that rests against the derailer. I think that is how yours may be set up (either that or the loop is a cable stop and there is either no provision for fine adjustment on the derailer or it is somewhere else). If the adjuster is missing then there will be nothing for the end of the housing to push against and it will just pass freely through the hole. Your LBS would probably be the best source if yours is missing.

enter image description here

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    So the entire trick is in the housing! – Jack Twain Sep 26 '15 at 17:37
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    Exactly! The housing is what makes it possible for the cable to move the derailer. – dlu Sep 26 '15 at 18:01
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This is a Shimano positron derailleur requiring a rigid wire cable that pushes AND pulls. The casing is one piece from the lever to the rear unit and has a snap ring to hold the casing in place .

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