Alaves scored twice in the last few minutes but Ancelotti looked for the positives, praising his side's performance in taking a three-goal lead and creating several chances to win by a larger margin.
"This is football and when you think the game is over, get distracted and allow your rival to score, you give your rival a confidence boost while your own confidence is shaken. It's something that happens all the time in football and it won't stop happening," Ancelotti told reporters.
"Sure, we don't want that to happen to us, nobody does, but we need to highlight that for over 80 minutes our team played really, really well and that is what gives us confidence moving forward.
"For over an hour the team played very well, looking for opportunities in different ways, in transition, filtering passes through the opponent's lines... The team is improving, it's good for us because the schedule is very demanding. Sunday's game (at Atletico Madrid) will also be very demanding."
Unbeaten after nine games in all competitions since the start of the season, Ancelotti's Real are second in the LaLiga standings on 17 points, one behind leaders Barcelona who have a game in hand and will host second from bottom Getafe on Wednesday.
Real will be back in action against Atletico, who are fourth on 12 points and will play at Celta Vigo on Thursday before hosting their rivals on Sunday.
Ancelotti said he was delighted with the progress of Kylian Mbappe and praised Jude Bellingham's performance after the pair combined well for the France striker to score Real's second goal.
"(Mbappe) is being great, we are doing really well in attack," Ancelotti said.
"(Bellingham) is growing, he gave the assist to Mbappe and played a very complete game. He needs to get used to playing a bit more inside the box, like he did last year.
"It's more complicated against a team with a low block like Alaves. What I ask Bellingham is to do that kind of work, not to score goals. With the players we have, we can score at any moment."
