I am also preparing a horse for a parade, and these are a few things I have done:
Ridden the horse near the road, and then next to the road to get used to the cars driving by and the sounds.
Sat on him in the round pen while others honked horns of cars, blared radios, used horn blowers and threw small objects (to signify candy and other objects kids' throw)
followed a car while mounted, and practiced standing behind it for 15 minute intervals.
dressed him up in his costume to include lights, and did all of the above.
Mounted and rode through mini obstacle courses, i.e my friends waving tarps through the air, randomly moving and making noise, moving large objects around, running in front and behind us.
I have also practiced trailering to different locations and ridden him to get him used to getting out of the trailer and being mounted in busy areas.
Basically if you know something is going to happen in this parade, make sure your horse is prepared for it. If the parade is at night, ride at night. It will also help to acquaint him with the other horses that will be riding with you from your stable. That way you don't have to worry about them trying to bite and kick each other while you are riding in a foreign and scary place.