Leeds United fought back from 2-0 down, but briefly led the match late in the second half.
The club's manager told Sky Sports News: "I have mixed emotions as it could have gone either way. It was such an open game and in a game like that, anything can happen.
"Even at 3-2 I felt we needed a fourth. We were unfortunate not to get it, but Watford are a good side who were nearly in the Premier League this season.
"We were 2-0 down and I am proud of the players. We were unfortunate not to win but I can't be too greedy. There may be an initial disappointment that we didn't win but we may well reflect on this as a good point."
The result has left Leeds eighth in the Championship table.