Watford manager Aidy Boothroyd believes he will have to let more players go before he can sign others.
He wants to sign former Reading fullback Ulises de la Cruz who has impressed on trial.
The Hornets went down 3-2 at Barnet on Saturday - their second successive defeat to lower league opposition.
Boothroyd told the club's website: "We clearly need players, but I think we've got to move players out before we can move players in."
The defeat at Underhill followed a 2-1 loss at the Milton Keynes Dons and whilst Boothroyd has been able to blood some younger players he feels that is not the answer for the coming season.
"We've got some very good young players thanks to the Academy system coming through but they're not ready yet," Boothroyd said.
Only Jon Harley has arrived at Vicarage Road over the summer, whilst there have been several departures from the squad as the Hornets look to reduce their wage bill after failing to get promotion back to the Premier League.
Record signing Nathan Ellington has gone on a season-long loan to Derby, but the Hornets raised �2m from the sale of Darius Henderson to Sheffield United.
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