Granada go into the game one point and four places below their opponents in the Primera Division table and Alcaraz appreciates the difference in resources available to both clubs.
But he is not daunted by the challenge his players face in a game where a win could see them climb into the top half of the table.
Alcaraz told reporters: "Valencia is a very demanding side.
"We have to take care of us, know how to use our weapons and know the type of game we want and can do and from there grow to try to win.
"My team is one with great potential but it will be a difficult game. We need a positive atmosphere for the team, because the game is not going to be easy, the opponent is of the best teams in Spain."
Valencia coach Miroslav Djukic, who has been linked with a move away from the Mestalla, could be without several players because of injury, with captain Ricardo Costa suffering from a muscle injury in his right leg.
Goalkeeper Vicente Guaita is absent with a pelvic injury and has been replaced in the squad by Jaume.
Winger Pablo Piatti remains on the injured list but central midfielder is available for selection by Djukic who added defender Alex Quintanilla to the squad which made the trip to Granada.
Djukic's job had been in doubt after taking three points for their first four games of the season but a 3-1 win over Sevilla on Sunday eased the pressure on the Serbian.
Valencia president Amadeo Salvo has insisted Djukic will end the season as the club's coach after Jonas scored twice as Valencia picked up three points against Sevilla.
Salvo told Spanish radio station Onda Cero: "Djukic will end the season at Valencia no matter what.
"Djukic is our coach and even if we had lost (against Sevilla) he would have continued. Djukic says that he has realised a dream coaching here and that deserves respect.
"You have to give these things time, there is no need to rush and in this case we will not. We have to invest in things so that for the future we will be successful."