In the google guidelines for SEO it is clearly written that donnt go for link exchange programs we doont gives them preference and infact in most cost case it could harm your site. But in reality its quiet opposite. Has anybody lost SERPS due to link exchange programs..
I don't see that in the Webmaster Guidelines. Do you mean this paragraph? "Don't participate in link schemes designed to increase your site's ranking or PageRank. In particular, avoid links to web spammers or "bad neighborhoods" on the web, as your own ranking may be affected adversely by those links." - Michael
Sure. The competition for high ranking in search engines has made PageRank a direct target for manipulation and it is not difficult to do. When Google talks about "link schemes designed to increase your site's ranking or PageRank" they mean nepotistic linking otherwise called "collusion strategies". There are many different kinds of collusion strategies for example see Pagerank Increase under Different Collusion Topologies. All the search engines spend a lot of effort on the automatic detection of collusion strategies and Google's guideline "Don't participate..." is an implied warning not to participate in them. Of course some collusion strategies are easier to detect than others and in practise it is just a question of risk versus reward as to whether you participate or not. The guideline "avoid links to web spammers or bad neighborhoods" is only slightly vague in that it is difficult to accurately define "web spammers" and "bad neighborhoods" although we all recognize them we see them. I hope that helps. - Michael