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Reciprocal linking or the practice of exchanging links with sites to create traffic is widely used in Internet marketing. However, it has both advantages and disadvantages largely depending on how it is done. Exchanging links with just about any site will simply work against you. It is a good practice to exchange links with as many sites that have higher page ranks than you do since there is always the possibility of diverting some of their traffic to yours. On the other hand, low traffic sites may divert some of your traffic to them with no measurable advantage given back to you.
Maintaining relevancy even in the choice of links is vital to the general perception of the consumers. Linking with unrelated sites may only confuse the user, enough to make him/her consider another site. Not all big things are great either. Linking with sites that have a huge link directory can easily bury your site. The appropriate exchange of links can build online relationships that will serve future ventures.