Does Nofollow on External Links Affect Your Ranking?

It’s well known that website raking does  not only depends on the quality and quantity of internal links, but also on those of the outbound links (sites you link to).
However, many people begrudge passing link juice to other sites and embed NoFollow tags in all (or major part) of external links. Is that the right thing to do?

The short answer is NO, IT ISN”T! 
NoFollowing all external links does you a bad turn.

Why? Because according to Matt Cutts video on Two Questions About NoFollow Google does not crawl Nofollowed links and hence it will never find out that your link to relevant sources that expand or complement your post  and give readers additional useful information. And those are exactly the points that Google wants to see in external linking, as giving readers more relevant info on a subject improves web usability and relevance of information that Internet resources deliver.

However, you may be bothered by the fact that dofollow external links drain your PR and link juice, and having too many links on any single page may be regarded by Google as a link farm, right? And therefore you may ask

How many outbound links per page should I have to improve my rankings, rather than hurting them?

I am afraid there is no hard and fast rules for that.  The best approach would be to use purely intuitive considerations and add as many links as necessary to expand your content with absolutely necessary and relevant info.

If a link fits naturally into context of your article and doesn’t overload your readers with excessive additional info, by all means add it!

P.S. Recently there has also been a long debate on whether adding NoFollow tag to internal links does any good for your rankings, as there are many apologists of that conception. In fact, it may or it may NOT.  It strongly depends on what kind of pages your are nofollowing, so be extremely careful if you do that.

For more details on the issue see the post by Loren Baker NoFollow Hurting Google Rankings? and watch Rand Fishkin’s video on dangers of nofollow.

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