Having clawed their way from a goal down away at Exeter on Saturday, the Pilgrims looked for a second successive 1-1 draw at the home of their biggest rivals until two late goals gave the Grecians the points.
And Sheridan, who takes his team to The County Ground on Tuesday night, admitted they are making simple mistakes which they are being punished for.
"We've had some really good possession of the ball but then we spoil it by making the wrong options," he explained.
"Simple things like crosses will go straight into the keeper's arms and they'll counter-attack deep in our half.
"We just do silly things at the wrong times. It is very disappointing to lose a derby game 3-1, when you are at 1-1 away from home just stay in the game because I thought we were the team to win it.
"It was a good performance for 80 minutes but you have to play for 90, and we didn't."
The former Chesterfield boss handed Paul Hayes his first start for the club just a day after he joined on loan from Brentford and Sheridan believes he will prove to be a smart acquisition.
"He did ok, he is obviously new to the lads but he scores goals," he said. "He scored goals in the first division (League One) and I think he will be a good player for us.
"I threw him straight in and he showed some good touches but it was his first game and he only joined up with us on Friday."