Hopefully this will help!!
If you cut your welt like in the drawing, it will allow for the heel of the blade to slide down in front of it and help hold the knife in the sheath. Also, build the sheath so that the blade sits slightly tip-down, so that gravity can do it's thing. Lastly, wet-form the sheath so that the leather can fill in behind the back of the blade and it will perform much like Kydex does, keeping pressure against the back of the blade.
I don't claim to know much about leather work. In fact, there are probably a lot of guys around here that have forgotten more about leather work than I'll ever know.
The one thing I do know though, is that there have been hundreds of Trailmates sold and so far, none have had sheath retention issues...
Steve