The German Head Coach's side were second best for the majority of the encounter with Forest worthy winners courtesy of goals from Eric Lichaj and Jamie Ward either side of half-time.
And Wagner was first to admit his side struggled to deal with Forest's high intensity and pressing approach play – taking personal responsibility for the defeat after the game.
"Today we did not perform - we were second best, particularly in the first half,” admitted David Wagner.
“They surprised us with their set-up and we were not able to handle it in the first-half.
“We were not able to make the right decisions, Forest overloaded the midfield and we were not able to catch them and close the gaps.
"At half-time we changed our formation and we were better but then we made a mistake - an unusual mistake - for the second goal.
"We left ourselves with a mountain to climb and we were not able to do it."
The boss went on to say that although it was a tactical mistake on his part which led to the defeat, his players must also take some collective responsibility as well.
“From the set-up and the tactical point of view I have to raise my hands; with our set-up, we couldn’t compete,” the Town boss said.
“But my players also know they weren’t good enough today – they have to raise their hands and say they made mistakes with the ball in the first half and a little bit in the second as well.
"We weren’t good enough today and deserved the defeat – we have to accept it, move forwards and focus on the next six really important games in front of us.”
The defeat, a third in four league games, leaves the side consigned to a play-off battle – currently seven points clear of seventh place Fulham FC but a massive ten points behind Newcastle United in the automatic promotion hunt.
“We and a few other teams are playing for the play-offs, this isn’t a secret and we’ve been doing it for the last three months.
“We have to make sure we perform well and collect points; the race for the play-off places is still underway and we are prepared.
“We will do everything to occupy one of these play-off places at the end of the season, but for this we have to play better than we did today.”