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Should I only be choosing keywords that are extremely similar to my niche keyword or can I deviate a little?
If a keyword naturally fits your subject, I would use it even if the search numbers aren't great and the competition is high. You wouldn't want to avoid using a certain keyword just because it's not profitable as long as it fits well with your site as a whole. It would be unnatural to exclude it.
Whether you include other related but not quite as relevant keywords or not will depend a little more on whether they're worth the trouble—do they have a decent search count? Do the top ten sites in Google have that keyword sewn up and you couldn't dream of competing? Again, if it's a keyword that naturally fits, use it, but if not, that's where I would get a little pickier and throw it out.
You can definitely deviate from your main keyword quite a bit as long as it's related in some way to your overall theme. If your niche was "wood dining tables," you might include the keywords "oak dining room sets" or "hand-carved wood dining table" (depending on how tightly you want to hold to your subject), but you probably wouldn't use "wood coffee tables" or "wood dining room cabinets."
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