Best way to cloak/track links?

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I use WordPress for most of my websites -- does anyone want to recommend the best way to cloak my affiliate links and than track those cloaked links?

Is buying a domain and using that domain to redirect really the best method? Can't I just cloak the traffic from my main website? Is it really necessary to cloak affiliate links that are embedded into my blog posts (and not being used for PPC campaigns and such)?

Looking for any and all suggestions for link cloaking and tracking (not just clicks but conversions and ROI etc) (your method or whatever method you'd recommend). Thanks!

EDIT: How about the WP No External Links plugin and individually setting link masking for affiliate posts? Wouldn't that be fine? Or, should I just track all links using Prosper202 (so we can find clicks to conversions rate)? Really confused and would appreciate any and all help!
#cloak or track #links

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