What should be done and what avoided under link exchange
There is a number of simple rules that every webmaster would surely agree to follow as far as link exchange activities are concerned:
 Avoid linking to websites that use SPAM techniques
Avoid placing too many links in a short period of time. A sharp increase in the number of links may cause a penalty from Search Engines.
Organize your Link Directory in a proper way, so that it is useful and meaningful to visitors, not just search engines. Messy and ugly pages with hundreds of links are more likely to harm than help.
Check that your links are reciprocal. This is easy to say, but hard to do. For hundreds or even thousands of links, checking reciprocity is a pain. Use one of the existing automated systems that do such checks automatically
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