How does 矢 look like an arrow?
Chinese characters originally looks more different when written in older script, e.g. Oracle Script, as stokes get simplified more and more and curvy strokes are then converted to straight lines and boxy characters, eventually, different characters look alike.

According to http://www.chineseetymology.org, 

矢 originally looks like this in Seal Script:




  Primitive pictograph 矢. An arrow. Meaning arrow.


失 originally looks like this in Seal Script:




  Augmented pictograph 失. Augmentation 丿(something lost) to hand 手 indicating dropping something. Meaning lose.


And for reference, hand 手 in Seal Script: