Reciprocal linking can help your PR rank, but you want to be aware of link farming sites that only contain links to other sites.
It won't boost your Page Rank, but a small amount of recip. linking can help boost your SERP results, if the sites you are exchanging with are good ones. That's why most people do it. As a rule, always go after one-way links, only do the reciprocal thing with high quality sites when it is the only way to get the link. Feel free to PM me, Sarabi, if you want more information about reciprocal linking.
mauik makes some good points. It is much more important to improve your SERPs than it is to improve your PR. A link from a quality relevant website can help a lot....both by providing direct traffic and by helping rankings.
It is best not to do recip. linking unless it is a related site that offers a similar topic as your site. This will bring a little traffic to your site and will be considered natural link building by Google so it will help with SERPs and could help with PR if the site is a higher PR rating. Recip. linking with non related sites offers very little benefits.
Great point, allout. There seems to be a lot of confusion in these forums that Page Rank, Traffic, and SERP rankings are all the same. Each of the three (PR, SERPs, and traffic) require very different strategies.
You are correct as when you will share or exchange your link with some low PR sites than your then the other website will get benefit and not your. So before exchanging just make sure that you are exchanging with some good PR sites....
It makes sense if your doing it for the right reasons. ie. Establishing partnerships with other sites in your niche (which are not necessarily direct competitors). You don't do reciprocal linking to increase PR.
You've made a good point yourself, and I am THRILLED to see that traffic was mentioned in this thread more then once. What is the point of PR? What is the point of SERP? The ultimate answer to both SHOULD be traffic! (unless you are in it for just selling links) In the end, all sites should be striving for traffic, and SERP is very important for traffic, and one of the best ways to get SERP is through link building...but what is the point of link building? Again, it's TRAFFIC! If you can exchange a link with someone that can offer up some traffic, then it may be worth looking into, even if it's on a PR NA page, or even if it's NOFOLLOW. If it'll pull in some HUMAN traffic, chances are that human traffic was interested enough in clicking on that link, so will likely have an interest in the page they are clicking into. *shrug*
While reciprocal links may have little benefit for SEO, but it does provide the novice with opportunities to obtain links from sites that may be relevant. You may want to do a reciprocal link exchange to get your site crawled / indexed faster or to build traffic. Don't get confused with "PR" and Traffic. The two are not necessarily the same thing. What is important is getting quality traffic, relevant to what you are promoting on your site in hopes that it will convert! Build links that will provide this traffic, and if it comes from a reciprocal link exchange, all the better.
While there may be "some" benefit from reciprocal linking it is not a good use of your time. Consider the time taken to get ahold of a good pr site that wants to do a reciprocal link. These days many sites have already-long ago- removed their links pages, stopped doing reciprocal links altogether and moved away from reciprocal links. Every 3 way link offer I have seen lately was a self serving joke where I was linking to their site and their shoe polishing site was linking back to mine. Also, consider the fact that many webmasters will remove your link without notice so you must regularly check up on your link partners. While there is some value to reciprocals, in general it is not worth the time and effort when you consider the other methods of link building that are of value. You didn't ask for my two cents, but you got it anyway. I have had to reduce the reciprocal links on my site by over 90% over the last year due to sites no longer wanting to do reciprocals anymore and I have lost faith in it altogether. I have continued to link to those sites that have left my site on theirs but will likely remove my reciprocal links completely in the next six months as every time I go to check out who is still reciprocating there are more that no longer reciprocate. That tells you the state of reciprocal links more than anything else- they just aren't done much anymore.
One way links are certainly better then recip links... that's for sure. If trading links is considered natural, then simply linking to a page you like would have to be even better... right?
Seriously. I don't EVER (and I mean EVER) do reciprocal links. One-way is the ONLY way to build authority, rank and PR. I've run a bunch of experiments on this. Got to PR7 in 6 months using one-way only links... Not to thread high-jack, but if you are in need of a bunch of one-way links, we are talking about an innovative way to build them quickly via RSS here: http://forums.digitalpoint.com/showthread.php?t=1206952