Three-Way Link Exchange is somehow similar to two-way link exchange but the differentiation is instead of putting a link to another site on your own site, you will place its link on the other site you have. It might sounds complicated but we can see briefly.

Three-Way link exchange is a refined term not a generic term. This term is used in case when more than two pages are concerned in linking. It means that Page X is linking to Page Y and Page Y is linking to Page Z. But Page Y is not linking to Page X and Page Z is not linking to Page Y.

This type of link exchange is better do with when you have a new website and you want to have a good page rank as soon as possible. Of course, that still depends if your link exchange partner has recognized a good page rank already. So be sure to choose a good and best optimized website before you ask to trade links with its webmasters.