Similar to keyword stuffing, purchasing links in bulk is a practice to be avoided. It gets suspicious if you bartered 1000 links with another site in a day or two. What is more, search engines keep track of link farms (sites that sell links in bulk) and since bought links are a way to manipulate search results, this practice gets punished by search engines. So avoid dealing with link farms because it can cause more harm than do good. Also, outbound links from your site to known Web spammers or “bad guys” are also to be avoided.
As mentioned, link exchange is not a clean deal. Even if it boosts your ranking, it can have many other negative aspects in the long run. First, you do not know if the other party will keep their promise – i.e. they might remove some of the links to you. Second, they might change the context the link appears into. Third, it is really suspicious if you seem to be “married” to another site and 50% or more of your inbound and outbound links are from/to this direction.
When links are concerned, one aspect to have in mind is the ratio between inbound and outbound links. Generally speaking, if your outbound links are ten times your inbound links, this is bad but it also varies on a case by case basis. If you have a site that links to news sources or has RSS feeds, then having many outbound links is the inevitable price of fresh content.
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