Both of these instances to me seem as though he is acting out his innate protect and defend characteristics.
1- middle of the night, someone comes in the room and he nips. Your niece probably woke him from a dead sleep and he went to reaction mode. Maybe have him sleep in a crate if relatives are in town. I doubt this would've happened if it was one of your own children coming into your room at night.
2- Ninja suits. Odds are, and I am speculating, the kids were hyped up and the dogs couldn't make out facial features and the sudden movements, combined with startling, aggressive child-imagination-ninja-glory-sounds was read by your dog as acts of aggression toward him. Again, reactive. I think 90% of ANY breed at that age would be reactive to kids in costumes being boisterous, it is just "scary and alarming" because it is a shepherd.
These are really simple peripheral and atmospheric changes that you can adjust.
Training is a must. If you can't afford to go to classes, do it at home. Focus on basic obedience work, take walks, play fetch, work on recall. Tire that pup out!
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