What is a good recommended length of the anchor text for incoming links ? I think I can sometimes get a 5 word anchor text link but could it trigger any penalty for me
Till 65 characters to 75 characters, I don't think any penalty could be given for the same, even in my 3 years of experience, i have never faced this kind of penalty problem due to anchor of link.
I don't think it will trigger any penalty but the value of the anchor text could be divided between the number of keywords in it. Most spiders seem to stop at a certain point so its possible you could end up ranking well for a cut-off word or something. Probably not much of a problem but probably not the most efficient way either.
Think about natural, organic linking - if you were to link to some page would you link with anchor text longer than one sentence? I don't think so. The penalty might not be the case here, as korr said crawler's buffer for anchor text could be limited, and you don't want to have your keyword cut in half, right?
I only limit my anchor texts to 3 words Some people do not like seeing 5-7 words in anchor texts, they tend to look at it as spammy kind of link... But I don't think you could be penalized for that.
2 or 3 words max IMO. Your link should be concise and to the point and most of all focus on the keyphrase best suited for your niche.