Step 1 - Determine the type of sites you want to trade links with. Focus on sites that are related to your site's market, don't go after sites that are not related, it won't help your ranking that much. To locate link partners search with your main search phrases in the search engines. Example, if your site is about cars, you could search with phrases such as car repair, tires, etc. The sites you see on the first few web pages of the search results should be your main targets. Remember to stay away from direct competitors.
Maybe the best way to Locate quality link partners is by visiting the Yahoo's directory or ODP because all these web sites were reviewed by humans before being listed. If you decide to use a directory visit the category that's most related to your web site, if your web site's subject is popular enough you should find more then one category that's related to your web site.
Step 2 - Review each web site you found carefully, check to see if they are using spam, if they are using spam, stay away, this will only hurt your web site in the long run. Remember to aim for the big money and not a quick dollar. Look to see If they have a links or some call it a resource page. If they don't have a links page, you should most likely move on and forget about it.
You should also review their content and resources they provide. Would their content or resources be useful for your visitors? Do you feel that it's a good resource? Is it a web site that you feel good about recommending?
Step 3 - After reviewing the web sites, you'll need to gather information about them. First, find out the owner of the web sites name. Sometimes the owner with list his or her name on the site, usually located on the about us page. Otherwise, you can get their name is by doing a WHOIS search. There are several available you can use, just search with the phrase WHOIS lookup.
Find out their email address. Remember to get the right one, you don't want to contact them through their support email address, instead search for their marketing or partnership email. Also find something on their web site that is unique and useful, this could be an article, an online tool or a service, use this to compliment them.
Step 4 - Create a list of all the web sites you have found related to your web site. You can list these web sites however you prefer. Personally I always rank them based on their link popularity, ranking and Page Rank. This allows you to have a good idea which ones you should target first. If your web site is new you should go after the web sites that don't have the highest link popularity or Page Rank.
Step 5 - Finally, we are nearly done. It's time to put all the information you have gathered into action. Send a custom e-mail to each site requesting to exchange links. Remember not to use generic e-mail link exchange request, half of the time these are deleted without ever being truly considered. State the webmaster's name, this will show that you have at least looked at the web site.