The Reds currently lie sixth in the table, five points adrift of fourth-placed Tottenham ahead of Sunday's clash at Aston Villa.
The Scot admits his team will face stiff competition in the race to secure a top four berth but remains convinced they are within striking distance of achieving their aim.
Dalglish said: "The teams that are there or thereabouts are really good sides. I know two of them got put out of the Champions League but there are still really good sides up there.
"It's going to be tough but we'll have a good go at it and see where it takes us.
"We just need to keep playing as well as we have done and get that wee bit of extra luck.
"It is only slight but then again some of the smallest steps are the biggest ones to take.
"We believe we are doing things the right way so we'll continue to do that because we don't know any other way.
"I think we have played well enough for people to judge for themselves whether we have the quality. We have certainly deserved more points than we have got but we are still progressing.
"We've been delighted with what we have done and we would love to progress into the top four."
Last weekend, leaders Manchester City suffered their first defeat of the season at Chelsea while Tottenham's hopes of putting further pressure on the top teams came unstuck at Stoke City.
It meant Liverpool closed the gap on the summit courtesy of their 1-0 success over QPR, but Dalglish insists his focus remains solely on what the Reds achieve week in, week out.
"We want to keep our own house in order and get our own games won," he said.
"If people above and around about you are losing matches and then you don't win you're not getting a great advantage.
"It was a great result for Chelsea against Man City but whether it was a good result for anyone else who knows?"
Liverpool's trip to Villa Park marks the start of a run that will see them play five matches in 16 days.
The festive period is often seen as a period that can have a significant bearing on a side's season, but Dalglish is unconvinced it will prove pivotal.
"I don't see this part of the season as more important than any of the others," he said.
"I just think every game is important. If you lose the title by a point at the end of the season and you've taken your full complement over Christmas then it's not done that much for you.
"You could draw at the start of the season and if it's only a point people could look back say 'that's the result that cost them the title'. Every game has to be treated exactly the same.
"Certainly, the demand on the players is greater at this time and that's when your squad is really tested.
"The people with really strong squads will be able to handle it a little bit easier than the others."
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