You're on the right track by praising him when he is alert. He needs to have his confidence built up, so don't coddle him when he acts scared or submissive. Enrolling him in a training class will help also. I fostered an ACD and she was very submissive, including the submissive urination ( I've heard ACDs already have very active bladders, then you add submissive behavior... ) In her new home they've taken her to classes and she is doing very well and has gained more confidence and is learning some manners. They say they are considering doing agility type activities with her once she has the proper training.

It is possible for your guy to be a good watchdog. If he sees someone or something outside the fence or out your window, he'll probably bark. That's the purpose of a watchdog (barking). As far as being a good guard dog right now, it's doubtful. Guard dogs have to have confidence and that usually comes with age and proper handling. He's still just a pup so being a guard dog isn't a big priority. When he gets older and more secure with himself, he'll realize that he has the ability and duty to protect his territory. So be patient with him and do everything you can to boost his confidence. When he meets strangers, have them get down on his level and tell them to give him praises, use his name a lot and act like they are the happiest people in the world to be meeting him. I hope this helps.