We consider relaying strategies for two-way relay channels, where two terminals transmits simultaneously to each other with the help of relays. A memoryless system is considered, where the signal transmitted by a relay depends only on its last received signal. For binary antipodal signaling, we analyze and optimize the performance of existing amplify and forward (AF) and absolute (abs) decode and forward (ADF) for two-way AWGN relay channels. A new abs-based AF (AAF) scheme is proposed, which has better performance than AF. In low SNR, AAF performs even better than ADF. Furthermore, a novel estimate and forward (EF) strategy is proposed which performs better than ADF. More importantly, we optimize the relay strategy within the class of abs-based strategies via functional analysis, which minimizes the average probability of error over all possible relay functions. The optimized function is shown to be a Lambert's W function parameterized on the noise power and the transmission energy. The optimized function behaves like AAF in low SNR and like ADF in high SNR, resp., where EF behaves like the optimized function over the whole SNR range.