Complete the game to unlock Nightmare difficulty.
End-game money exploit:
After you defeat Kaos in the last level of the game, the Crane Deck becomes filled with gold (between ~6000-8000). Pick this gold up then hit the Home button and return to the Wii Menu without saving. The Skylander will keep the gold but the game will return the gold to the Crane Deck since you didn't save. You can repeat this over and over to easily unlock all the moves for all the Skylanders and buy any hats/charms that are expensive. Note: Don't forget to pick up the Winged Sapphire from the Crane Deck after Level 15. Picking this up saves the game. If you touch it after picking up the gold then the gold will not re-appear.