I like to set my peep with my eyes closed. Install it close to where you think it should be, then draw your bow with your release and an arrow on the string with your eyes closed. Set your anchor points with your eyes closed, so everything feels good, then open your eyes to and adjust and have a buddy slide your peep to align with your eye.

If you grouped good beforehand, your peep is either to high/to low on the string now, in effect screwing up your anchor points, or the sight housing is not centered in the peep hole at full draw. I always try to size my peep to fit my sight housing at full draw, sometimes bigger ain't always better.