You may not going to like my answer, but... you probably aren't doing anything wrong. Although Ergo markets their carrier as having front, hip, and back positioning options it's really designed for front and back. While the hip position is possible, most people do not find it to be the best or most comfortable option for a hip carry. I worked in a store that sold Ergos for a few years, and pretty much everyone who came in looking for help with the hip position with their Ergo complained about the strap riding up as well. You could try to have the shoulder strap rest on the ball of your shoulder to start, that should be more comfortable, but chances are if you move your arm it will ride up. The strap is too narrow and not contoured to cup your shoulder, hence the riding up.
If you really want/need to do a hip carry you may want to invest in a carrier better suited to that position. A ring sling, pouch, short wrap, or even a dedicated hip carrier would probably be more comfortable then the Ergo. If you have questions about choosing between those carriers, please do post. I'm sure we'd be able to help you figure out what would work best for you and your little one.
*mama to c 2/2000, v 2/2004, p 9/2006, and h 12/2012*
one of the mamas behind BeanTreeBaby.com ...Gear for Growing Families!