And the Toffees boss admits he may have to wait until the January transfer window before he can find the answers.
Everton led through Romelu Lukaku's early strike but were then blown away by Stefano Okaka's first goals for Watford, either side of Sebastian Prodl's header.
Lukaku pulled one back with five minutes remaining but Koeman's side could not find an equaliser and have now won just one of their last 11 matches in all competitions.
"It's strange, and sometimes difficult to understand what happens," said the Dutchman.
"We started really well, we were confident on the ball, scored a good goal, and so it's really frustrating.
"Why did we lose control of the game? Why did we give belief to Watford, who at the time were nervous? That's my question.
"At 1-0 up it should give us confidence
I'm really disappointed with the goal for 1-1.
"We conceded two from set pieces and then showed a good reaction
But why always that reaction? We need to be more proactive, we are reactive and that's the problem.
"The Premier League is not always about football quality, it's about physicality and winning second balls and in that aspect the team is too weak.
"We have difficulty against direct, aggressive teams
In that aspect we need to improve and do better and that's the big concern.
"You can't do that in two weeks, you need January and the summer
We need a better balance in our team."
It all appeared to be going to plan for Koeman when Lukaku crept behind the Watford defence to open the scoring after 17 minutes.
But Okaka's first Hornets goal, a superb backheel at the near post from Nordin Amrabat's cross, dragged Watford level at the break.
Prodl's header then put them ahead before Italian striker Okaka, a bit-part player at Vicarage Road since joining from Anderlecht in the summer, nodded in his second to cap a fine performance.
"I've known Okaka since he was very young at Roma," said Watford boss Walter Mazzarri.
"He was a great talent then, so when we had the opportunity to sign him we took it
He's perfect for the Premier League.
"He doesn't only help himself, he helps his team-mates to play football and to score.
"It was great movement and the whole play that led to his first goal we have been practising all week
Okaka then did what only important players can do."
Source : PA