I think the new smaller sprite is a huge improvement on the old larger one, but I think it should be taken a bit further. I did an example edit to show you what I mean:
First of all, the saturation on a lot of your colors is maxed out, that often doesn't look very good unless you're going for the neon lights look. You'll usually want to tone it down to get a bit more gray in there, that also really helps when using colors for anti-aliasing, when the saturation is low you can use the same AA color for multiple other colors.
I assume the horse is mostly just a sketch at this point but the contrast issues are pretty severe. The mane and tail being so much darker than the outline make it look very odd. Also as was mentioned by Tuna the selout on the horse is awful. On a neutral background it looks like little spikes.
With the player character, I upped the contrast and tried to bring out the main shapes with larger, simpler areas of color. Not so sure what the shield was supposed to be so I made it metal. Maybe it's a hide shield though? I couldn't really tell. Also cleaned up the sword a bit. I like the silhouette a lot, didn't really touch that.
Edit: Yeah, don't take my "horse" anatomy as accurate, I didn't use a reference for it.
Shading and colors still stand though.
