Yes, you are. If possible, the sides of the hole you are repairing should be angled outward at the bottom, so the new patch will not have wiggle room. You could use a chipping hammer to cut the angle. Also, consider using a bonding agent on the edges of the concrete (around the area already cut). We use a product called Bull Bond- it's water based but it works- look for it in a quart size, what you don't use will keep quite a while for future use. And if you have to add a little topping of cement to level it to the exisitng driveway surface, coat again with bonding agent first.
Not sure what you mean about topping with sand and water, though. Gravel and sand packed down with a tamping tool before you mix the cement should work fine.
I would add some screened sand to your cement when mixing; I think it'll make it more durable.