There are several factors that determine the benefit that you get when you exchange links with any website. Sometimes you may be giving away some of your hard earned PR (Page Rank) without getting it back in return. While it is debatable if the primary purpose of exchanges is the traffic or the PR gain, a combination of both these motivations is usually present when we exchange links. Apart from the direct traffic, some of the other factors that help to determine the value of an incoming link are:

1> The PR and number of links
The higher the PR of the page linking to your site, the better the link in general. The PR that a page has, gets distributed between all the links o­n that page, so the PR and the number of links together should be used to determine the worth of a link.

2> Direct or Redirected Link
Some sites like to keep track of which link gets how many clicks. Many people believe that this will prevent the PR from flowing; generally this is true but not always. A 302 redirect is a temporary redirect which does not pass the PR, where as a 301 permanent redirect allows the PR to flow.

3> Meta Tags
The robots meta tags determines if a page will be indexed by the searchengine or not.

4> robots.txt exclusions
The robots.txt file is used to inform the searchengine spider which pages o­n a site should not be indexed. When you exchange links it is a good practice to look at domainname/robots.txt just to get an idea if the page where your link is going to be placed is within reach of the crawlers - or not.

5> javascript includes or redirects
Some webmasters may place links in an external javascript file! Google has been crawling external .js files and it is not likely that the search engines can be fooled. You should always prefer an o­n page link to a javascript link.

6> IFRAMES
An IFRAME is a page inside another page. If you encounter a site that is using an IFRAME to link to other sites, you should visit the IFRAME url and check the PR of that page independent of the outer page. You should determine the worth of the link by the PR of the inner page.

7> In Context Links
There is a good amount of speculation and I myself do believe that incontext links are given more importance by the searchengines. So if there was a choice between an in-context link like
The work at home business community ...
and a standalone link like
Work at Home
I would certainly go for the in-context link.

8> Link Title
It is important to have your keywords in your link text. In addition to the link text the link 'title' parameter also is believed to play some role.
Work at Home
is preferable to Work at Home
When you move your mouse over the first link, you will find a small tooltip like description for the link. The title parameter works link the alt for images.

9> Bold
Links in bold are believed to be given more importance,
Work at Home
Is preferable to Work at Home

10> Prominence
Some people have debated that the higher o­n the page that your link appears, the more important it is considered by the search engines.

Those are the points to remember when you exchange links. When you search in google for link:yoursite.com you will be able to see the important backlinks for your site (or your competitor's). Usually pages with PR4 and above will show in google backlinks and these links are the most valuable link partners from the viewpoint of the search engines.