"I expected William to jump clear and stay in there as long as he could to get the crowd as noisy as he could. That's all part of it, that's why I was hanging back," Nicholson said.
"Perhaps I was a little bit casual to the first [jump] and I had to squeeze him [Nereo] to get up to it. That panicked him a bit and he wasn't really looking at the second [which he knocked over]. Then he feels like he's done something wrong and gets strong and bouncy. You try to be calm and ride them softly but if it goes wrong, it goes wrong."
Nicholson knocked over further rails at the fourth and ninth jumps but appeared philosophical and sanguine as he was consoled by his family.
"You know before leaving home that you've got to do all three disciplines well. Nothing's going to be given to you and it's a luxury to have any rails in hand at a four-star event.
"There's not much point being suicidal about it, it's done. William's horse is fantastic, he rides it beautifully and deserved to win.
"I'll have to come back again."
Of the other New Zealanders, Jock Paget on Clifton Lush dropped one rail to finish third on 44.8 penalties with Sir Mark Todd and Leonidas II fourth on 48. The pair pocketed 40,000 pounds and 30,000 pounds respectively; Nicholson earned 17,000 pounds.
Paget, who withdrew Clifton Promise earlier in the day due to stiffness from the cross-country, said he couldn't be prouder of Clifton Lush.
"I was conscious of the time [the course had to be completed in 88 seconds]. The horse is quite nifty on his feet but with all the turns you had to keep travelling.
"It makes it tough after they gallop the best part of 11 and a half minutes the previous day."
Todd, who suffered one penalty point for being a second over time, was impressed by Leonidas II's jumping capability, especially with an eye on the Rio Olympics next year.
"He's got such a big stride that down all those lines you've got to go quite steady, meaning it's quite hard to reach the time.
"You couldn't be too tight on the turns and I didn't want to go too quick because he was riding so well. He could've been a show-jumper he's got so much power."