After the promise of the weekend performance at Leicester in his first game in charge, Leeds produced an abject performance across the park in a painful defeat, their sixth on the spin in the Premier League.
As it stands, Leeds are on 23 points, two points above third-from-bottom Burnley, but have played two games more.
Norwich prop up the table with 17 points from the same amount of games as United, while Watford are one place above the Canaries on 19 points. They have also played the same number of matches as Leeds.
On a tough opening night at Elland Road, Marsch said: "I under-estimated the stress of the moment from a players' perspective.
"We have had a very good week and ten days together and I have tried to create clarity for the group as to how we want to play and the behaviours that we want and tactics to create clarity with that.
"But it was clear from the beginning that we lacked confidence and aggression in the match.
"I have heard a lot about the Elland Road crowd and I thought it was fantastic from the beginning. But I also could see that the players want to do it so badly for each other, the club and for the fans that it brings more pressure and stress onto their shoulders.
"From the beginning, I've said we have to stay calm and clear and I can see that's a message we have to stay strong with.
"When we step on the field, we need to know that fear won't ensure failure and protect us from failure. We have to be fearless and attack matches and go after opponents. That is the biggest lesson from tonight
"It’s been clear with tactical responsibilities and roles and executing them in a confident way. Stress is a factor. It clouds judgement, it clouds clarity with discipline and what we’re trying to create. We accept it as normal, but take away the lesson again that fear is going to block us from achieving our goals."
A rough evening also saw Junior Firpo stretchered off with a knee injury late on and Marsch fears he will be out 'for a while'.
"I don't like to speculate about injuries, but think this one might keep him out for a while. It looks like inside knee, maybe an MCL strain," the American.
The sole positive saw Patrick Bamford make his long-awaited first-team return after just over three months out with injury.
Marsch said: "I thought Patrick brought energy into the match, a couple of dangerous moments, his personality is important - he’s confident. He doesn't suffer from fear. We’ll need that.
"We'll need him, his quality, his personality within the team - it gives me a lot of optimism."