The main idea in this paper is to design and analyze a symmetric key generation algorithm whereby we can strengthen wireless network security. Our main goal is generating a sequence of highly secure secret keys based on an ARQ based transmission mechanism that relies on the statistical independence of channel errors between the attacker and legitimate users. This leads to some information loss for the adversary which allows us to constantly extract keys by using universal Hashing techniques from communication process, about which we can make sure that adversarys knowledge remains negligible. More specifically, the key generation algorithm is analyzed and designed in a way that targeted security as well as the required throughput and synchronization goals for the transmission are achieved. Simulation results show that the designed algorithm achieves the desired requirements for both system security and throughput.