Reciprocal Links are a mutual agreement between two webmasters to exchange links (i.e. they both add a link to the other’s website on their own website). Most search engines (especially Google) are sophisticated enough to detect reciprocal linking and they don’t view it very favorably because it is clearly a manufactured method of generating links.

Many believe that websites with reciprocal links risk being penalized. However, if the sites linking to eachother have similar content and benefit from linking then I personally don’t think its a bad thing.

Of course its always better to have one-way (incoming) links - they are much more valuable, but reciprocal links are a good way of starting your seo campaign for a new site.