but ive lost 4 stone in about 2 months
Is this intentional and/or desired weight loss? How long have you been T2 and how long have you been using insulin?
Do you follow any sort of diet to manage your weight and/or T2?
It's possible that losing weight has reduced your insulin resistance (assuming you are T2) and hence your need for insulin.
As for injecting in your arm, if you always use the same spot you can end up with insulin absorption issues, so it's better to rotate sites.
Some people get false hypos when their blood sugars are normal if they have been running high for some time (ie they feel hypo but aren't really) and these pass as they get used to the new levels, but it doesn't sound as though you have been running high.
Have you talked to your GP about your symptoms? They don't have to be caused by diabetes as your diabetic control sounds quite good to me, though fear of hypos can be mentally quite debilitating.
When you say your insulin wears off in two hours what do you mean? Does your blood sugar go up? Hopefully you're not injecting
more than the twice a day that you have been instructed?
If it helps diabetes UK have an advice line for insulin users (and other diabetics) that you could call on Monday (they work 9 to 6 weekdays). (That's assuming you are in the UK).
0345 123 2399
Lots of virtual hugs.
Edited to add
And welcome to the forums.