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It's the Shadows Hunter that first came up with the rankings for the Nightmares, over the years and centuries they discovered Nightmares gradually change with age and power, the older the Nightmare the bigger and more stronger they become and more intelligent and cunning with her hunting.

As a Nightmare start climbing the ranks, they start making a name for themselves, a title, usually in there hunting Style or there demeanor.

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Example: Malice is know as the 'king of Nightmares' story's of Malice have past down the generations of him leading the Nightmares to wipe out entire cities. He is also call 'the black Nightmare' no one knew of Malice's alternate forms and his true form was said to be the darkest of all Nightmares.

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Dreamwaker is know as the 'lullaby Nightmare' she sings Erie versions of nursery rhymes, and lure people to sleep so she can feed on their fear as they sleep.

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Shattered Dreams, is know as the 'harbinger of death', the very soul of his victims are said to be trapped in his icy armor.

This is just to name a few.

Ones a Nightmare reaches Alpha, they are able to take all thh dark energy they have collected and use it to awaken to a Tormented form, though the Shadow Hunters have given them class names, no two Tormented are the same, (and this is why I have ran into a little problem with other people Tormented forms ':D)

The Tormented forms develops around the Nightmares personality and hunting Style, so it will have a lot to do with the title they have or in Malice's case what he was design for.

Example:
Malice's Tormented from is pretty much the Enforcer, as the one who enforces the contract, Mal has a move that can wipe an entire city off the map, in other words if there something that needs to be removed he can wipe the Slate clean of it's existence.

( But I'm not going to go over a lot about the Tormented in this lore)

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Age is the average way a Nightmare climb the ranks, with feeding on other fear and flesh.

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There are other ways for a Nightmare to climb the ranks quicker than age, absorbing a stronger Nightmares essence.

An example is, Eater absorbed some of Mal power thanks to the help of Omen, so Eater made a huge jump from Omega to Alpha.

Most the time the other Nightmare is dead for one to absorb their Essence because what Nightmare in their right mind or willingly give up some of there power to another Nightmare?
Mal had no choice in this case.

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some how gaining a huge amount of fear and negative emotions from others, and I mean a Huge amount, a Nightmare has to gain enough to support them and then still have enough to store it so it can start building up to be used as a Tormented.

That all

It's ok, my description of the tag at first wasn't really clear