McDermott's side have taken four wins from their last seven games and, although they are still in the relegation zone, they have moved to within one point of safety.
"There's a lot of confidence around the club and we're enjoying the challenge," said McDermott.
"We had a good month in January and we started off February with a win against Sunderland.
"Unfortunately we got beaten by Stoke but now we've got a really big game against Wigan on Saturday and we're looking forward to that."
McDermott puts his side's recent good run of results down to a switch in attitude - the Royals have begrudgingly sacrificed their forward-thinking approach for a more conservative, clinical style.
Speaking of his decision to switch plans, McDermott said: "The dawning moment wasn't actually when we were 4-0 up against Arsenal and got beaten 7-5, it was the other game when we got beaten 5-2 against Arsenal.
"We'd tried to take Arsenal on and play open, attacking football but after that game I felt we needed as a group to find a way to win - and we've done that.
"It goes against the grain a little for me, but we are still trying to attack teams and we've changed things late on against teams to turn draws into victories.
We played Chelsea recently when we were 2-0 down with four or five minutes to go and we drew 2-2 - that tells you there's a great resilience among the group."
Before the end of the season Reading play relegation rivals Wigan, Southampton, Aston Villa and QPR on their own patch - but McDermott says he cannot afford to simply focus solely on those crunch matches.
"I can't see how you can target those games and forget about another one," he said.
"We go into a game of football against whoever we play as best prepared as we can and try to win that game as a one-off. Then we go to the next one. That's the only way I can think."
However, former Tottenham boss David Pleat, who was also in The FF Show studio, reckons positive results against those sides will inevitably help Reading's cause.
"If you can beat your immediate opponents it does give you a massive lift," he said.
"There are no games that are six pointers that are life or death; the only game like that is the final one of the season which are heart-stopping, terrible occasions. But until that time you've got a chance.
"You must still be in it for that last game and Reading have a chance because their destiny is in their own hands.
"And if they beat any one of those sides it will be a massive lift because you're putting them down."