Nightmare is actually quite easy.
Always try and avoid a fight rather than get into a fight.
Use your flares and flash grenades when there are plenty of larger enemies.
When you have companions just back up, destroy them with light and let your companions waste their ammo.
Make sure you are using all supply chests available to you! I personally followed this guide.
https://www.xboxachievements.com/forum/topic/205346-alan-wak...Another tip is to high beam your enemy for a second which will slow them down, then run to the next safe haven. Continue turning around and using this.
I think i would have died about 3 times in my whole nightmare playthrough. Do not be scared to use all ammunition available to you as usually you will lose all your ammo at the start of the next episode anyway. Many times I ended levels with plenty of flash and flare gun ammo.
Also ensure to walk through ALL safe havens, these are checkpoints. You can also go back to a safe haven and it will trigger a save if you beat some hard enemies and want to save that progress.
GOOD LUCK!