Working process of the engine retarder has been analyzed, the method to increase the braking power in every engine stroke and the effect of this method to the whole working process were analyzed, some methods to get more powerful brake performance were discussed, and the formula to calculate the braking power of the engine retarder was given, and the definition for the system potential was put up. Furthermore, a new project of the valve movement has been put forward, which made the intake stroke, compression stroke, pressure release all happen in one piston reciprocation, and that greatly improved the retarding power. A new concept of the retarding efficiency to evaluate the utilizing level of the different engine retarder types to the largest braking power of the engine was provided. 