Exchanging links with sites that are within the same theme as yours is a good idea if you link exchange in moderation. If all your backlinks are from link exchanging, google will penalize your sites.
2 way link exchange
This is where you link to a site and that site links back to your site.
3 way link exchange
This is where 3 sites interlink to gain backlinks. Site "a" links to site "b", site "b" links to site "c" and site "c" links to site "a". All sites get a backlink this way.
Do Link Exchanges Work?
Backlink verifying tools allow you to check if a particular site is linking back to you. This is a great way to keep track of link exchanges.
1.) http://www.siteopsys.com/back-link-verifier.tool - The Back Link Verifier tool reports the presence of domain links on specified URLs. Run this tool to know if domain links are present for a specified URL, the number of outgoing links on a linked page, it's PageRank and indexing status on major search engines.
2.) http://tools.seobook.com/general/link-check/ - This script allows you to check your reciprocal links free to see if link partners are still linking back at your site.
3.) http://www.webconfs.com/reciprocal-link-checker.php - This tool helps you ensure that your link partners are linking back to your website. It also determines the anchor text used by your link partners to link to your website.
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