you're half way there. The problem is you have to find north first (or South if you're in the Northern hemisphere). You can do this with your watch if it is set to the correct time, and not to daylight savings time. You also need to be able to see the sun, so no good at night time or on overcast days. The fixed bezel on this watch will only confuse things, unless it's 12 midday and you're in the southern hemisphere. For anyone in the Northern hemisphere, it will never be right, unless you get the midnight sun. The compass markings on this watch are only for fashion, or more likely, to give the illusion that the wearer is an outdoors adventurer. A rotating bezel will help with better accuracy - esp between the cardinal points (NEWS). Watching a video will help - I'm only pointing out a couple of issues. Actually even a diving watch with a rotating bezel is the next best compared to a rotating bezel with compass markings - they're very handy because you can count the clicks between the hour hand and the 12, then halve those clicks to get South. This is what I do if my partner is navving; I can keep a loose eye on things and it keeps me familiar, albeit using North instead of South. Although after a while I get lazy because I generally know the directions in relation to the sun and the time of day and season (through winter the sun goes NE to NW for us in the Southern hemisphere). If you watch a video or two, you'll understand what I mean. One more important detail with using a watch as a compass; for me in the Southern hemisphere, I'd find North using the sun (and I'd point the 12 at the sun then bisect between the 12 and the hour hand). For anyone in the Northern hemisphere you'd find South using the sun (point the hour hand at the sun, then bisect between the hour hand and the 12).
Once you have South, then you know North is behind you. I subconsciously know where cardinal points are in relation to each other - if you don't, a mnemonic is useful. Never Eat Slimy Worms. This mnemonic gives you the the location of the cardinal points from any one known cardinal point - it works clockwise the same way that it is said. For example, if you're facing North (Never), 90 degrees to your right is East (Eat). Or, if you're facing South (Slimy), 90 degrees to your right is West (Worms). Another advantage of a compass is not having to remember that.
As wiley-quixote has already said you're really better off with a compass :) . A transparent (silva) compass is more accurate taking a bearing from a map, or a bearing from from a landmark, then lining it up on the map, and map work in general. Even orienting a map is a very useful thing. If you're atop a mountain you can orient the map then know where everything is from your view point, for example. I've also oriented maps in foreign cities where I'm not familiar with landmarks, usually when I need to know whether to turn left or right on a road intersection (road has the same name left and right). With a silva type compass you can easily allow for the difference between magnetic north and true north. A diving watch with rotating bezel has the more useful 60 minute timer that can also pull duty for compass points (N at 60, E at 15, S at 30, W at 45).
Using a watch is pretty accurate - I have no trouble with it so long as I can see the sun. Generally what happens (for me in the southern hemisphere) is I find North. Then I face the direction I want to travel in, according to my North. I take note of where the sun hits me while I'm facing the right direction, for example, at right angle to the left or just a bit behind my left shoulder. Then I go. If the sun starts getting behind me, or shifts around in front of me, I know I'm veering off (or the track is changing direction). As the sun moves you have to keep re calibrating this - say every 30 mins. This is what I do with compass or watch. It's usually to keep track of where I am on a track. I look at the track on the map and see there's a big direction change at a certain point. It's just another way of keeping track, along with time (I average 10 min per km on rough track - so after 30mins I should be about 3km further along on the map) and other features shown on a map (creek crossings, re entrants, track going up or down, slope climbing on my left side or dropping off on my right etc, dense bush, swamp - all those things you get off a map). Where you lose some accuracy, is relating a bearing to the map, or taking a bearing from the map. It does help to take the watch off your wrist for map use, and to hold it at arms length for more accuracy.