Suppose you have a website A, you ask website B to place your link on his site...Again he ask where you'll place my link..you show him website C.. this is 3 way link exchange...
In order to do that it involve 3 sites. X is your site and you want to link to Y, but he will going to place your link in his Z site. The transaction would look like this: X : your site link to Z: other site Y : your link trade partner's site link to X : your site hope you understand!
3 way link Building: Site A links to Site B, Site B links to Site C and Site C then links to Site A. A->b->c->A In this, aim is to have a link from a site having good page rank on our web site. In return of this we link their website from our other relevant directory and website.
Three-Way Link Exchange is somehow similar to two-way link exchange but the difference is instead of putting a link to another site on your own site, you will place its link on the other site you have. Three-Way link exchange is used in case when more than two pages are involved in linking. It means that Page A is linking to Page B and Page B is linking to Page C. But Page B is not linking to Page A and Page C is not linking to Page B. This is usually done when you own two websites. One website has already many back links and page rank and the other one don’t have many back links and/or don’t have page rank. You put a link to another site on the website that has already many back links and/or page rank and in return, your link exchange partner will put a link of your site that doesn’t have any page rank yet.
The first time I heard it, they call it triangle link exchange where A-B-C-A (this would the easiest way to explain it). In 3-way, mostly 2 sites are owned by one person/company.
3 way linking is to stop search engines from counting them as reciprocal. So an example: Bill owns www.Billsite1.com and www.Billsite2.com John owns www.Johnsite1.com www.Billsite1.com liks to www.Johnsite1.com www.Johnsite1.com links to www.Billsite2.com There is NO return from www.Billsite2.com to www.Billsite1.com! This way www.Billsite2.com gets a non reciprocal Backlink as does www.Johnsite1.com So there are only 2 backlinks total on 3 sites!!!
Too sad to say but most people engaging in 3 way link exchanges are doing it with the express intent to manipulate search results.
Well 3 way links are when A links to B, B links to C and C links to A and personally I will advice u to not waste time on them because like reciprocal, they are also pretty much dead. There are few who still believes they work but I don't think its worth ur time. If you don't know know what 3 way is, than obviously its not for you. Stick to what Google says