Skylanders Giants

You can't play Nightmare until you beat the game once. The game isn't terribly tough, but there are a few things you can do to make it easier.

First, unless you have an issue with playing games on Easy, pick the lowest difficulty for your first run. That way you can level your Skylanders up for the Nightmare run. Also, once you've finished that first run, there's an exploit you can use to level up your Skylanders' abilities... and you can do it for ALL your figures once you've beaten the game once. Look for that solution here: Solution for Spend That Loot! In Skylanders Giants Note that if you keep the save file separate, you can level up any new figures you get later.

A final note: each figure you own is like another life. You can beat the game on Nightmare with just the three characters from the starter pack, but when you die in a level you need another figure or you have to restart the level. While the game isn't overly difficult, it's a lot easier when you have a few more figures in your collection.

I've got two solutions. You can either have a nightmare or a pleasant dream. First, the nightmare.

The Nightmare achievement, as the previous two guides have indicated, can be quite challenging. Enemies are much sturdier and must be attacked repeatedly to defeat. They are much stronger and can defeat your character with only a few hits. I played it initially with the characters in the starter set all three at level 15. I equipped each of the three with the trucker hat for the plus 25 armor.

Cynder, leveled up on the Shadowdancer path, was the best because of her defensive skills. Particularly valuable is the Deathbound ability only available on the Shadowdancer path. It causes enemies who are hit by ghosts to move more slowly. The best tactic is to be patient. Evade, move to open ground, and use long range attacks. Use Cynder's dash more for defense than offense.

This was very grueling. It took me almost a week to complete from start to finish playing several hours a day. However, a big thumbs up to Activision for designing the game so it could be completed with the starter set. Nevertheless, this achievement doesn't have to be a nightmare. I had a series one Stealth Elf from Skylanders: Spyro's Adventure. She was at level 8 wearing the Unicorn Hat (Armor +12, Critical +12). She was fully leveled up on the forest ninja path.

Stealth Elf zipped through each level like a hot knife through butter using her decoy ability. You simply head towards the enemies, activate the triple scarecrow decoy. Move the double green dot that shows where she really is to a safe place and let the scarecrows take care of the enemies. She was particularly effective against the final boss where the targets are clearly defined. The reinforcements attack the scarecrow decoys and get sliced up while the real Stealth Elf has slipped away to a safe area. Finally, if you do suffer the occasional hit, Stealth Elf's Sylvan Regeneration will slowly but surely restore her to full health.

It took a little over three hours from start to finish. Stealth Elf never broke a sweat and was not even at level 15 at the end of the game. I did try to hit every Auric shop to get lock puzzle keys and skystone cheats. Also, many shops have potions that provide temporary enhancements. I'd bring in Tree Rex where a giant worked best but otherwise stuck with Stealth Elf.

Nightmare unlocks after your first playthrough. You have to start a new game, so be prepared. Especially the final boss fight will cost you a lot of skylander lifes.....
Also its a kid game, so its not that hard at all, only the boss fights can be a bit frustrating. Everyone with a collection of level 10 skylanders from the first game should have no problem to complete this.
Note that you have to start from the beginning, you have to collect everything again. I think the best is to complete everything on your first playthrough so you can breeze through the nightmare levels. Good luck!

I manage to beat the game on Nightmare difficulty by only using the skylanders giants starter pack. Just upgrade them to max level and choose the right paths for them and you ready to go.