Nightmare difficulty is unlocked once you beat the game. After doing so, select a new save file, and set the difficulty to Nightmare. You cannot change the difficulty of your existing save to Nightmare, nor can you change the difficulty on your Nightmare save once you start it.
- Enemies are much stronger on Nightmare, and you can expect to die in one to three hits.
- Avoid whatever fights you can.
- Use maxed out Skylanders, preferably ones with ranged attacks. See Spend That Loot! for a way to get potentially unlimited money to upgrade your Skylanders' abilities.
- Equip your Skylanders with the best hats you can find.
- It is helpful to have as many Skylanders as possible, as they are essentially extra lives. The less you have the quicker you'll need to restart a chapter.
- Take your time, be cautious, and you should make it though without too much trouble.