When seeking out link partners, it is very important to be somewhat selective. Relatedness is key: if there is no connection between your site and the site linking back to yours, the link will not be valuable in the “eyes” of the search engine.
Of course, getting direct competitors to trade links with you may be a challenge – one that you may not wish to undertake simply because you don’t want to link back to them, either – but it should be relatively easy to track down related, non-competitor websites for possible link swapping opportunities.
Take, for example, an auto insurance website. Assuming this site wants to boost its reputation by obtaining backlinks from other sites, its owner should seek out related sites for link trades. Some good options would be sites offering other types of insurance (health, life, or homeowners, for instance) or sites discussing vehicles outside of an insurance context.
Though it may seem like more than a search engine algorithm could possibly deduce, these programs are indeed able to evaluate whether one site contains words or phrases that are used on the other sites to which it is linking. Related sites are awarded more value than those that seem unrelated, as a way of rewarding natural linking compared to artificially obtained backlinks.
You can find useful, related link swap opportunities by participating in online forums or communities for people in your industry, or by searching for similar keywords or phrases to find web pages with similar content. Though it may take some time to find these pages, your efforts will be well rewarded!