Things have changed since v1.2...
Unless you have access to Fluyts or galleons yourself, don't expect to be able to go toe-to-toe with pirate fleets in the trade theatres (for the most part, pirates in the caribean have smaller ships & fleets).
That means that as any nation other than Spain or UP, only once you can recruit 5th rates will you stand a fighting chance of defending inter-continental trade.
Real payback comes with your ability to recruit 3rd rates as these simply outclass Galleons and fluyts, although it's still best not to underestimate them!
Also, be wary of auto-resolving naval battles as the current outcomes can be a bit harsh. The quality of your admiral plays a large part in whether you will get a good result or not though.
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