“Trim is speed”… what I used to tell my students when I was instructing. Perhaps not totally germane to the current topic, but you can trim a plane to fly straight and level at a very slow speed (ask any student about slow flight). You can also trim the plane to fly straight and level at a much higher speed (call it cruise). And you can trim the plane to fly at any desired speed between these two regimes. What trim is affecting is drag; trimming nose down reduces AOA (angle of attack) and hence reduces drag, conversely trimming nose up increases AOA and hence increases drag. So as a pilot who wants to maximize efficiency, for a given power setting and desired altitude, you want to trim the plane for maximum speed (minimum drag). Trim is speed.
But talking about the DCS Mosquito (and most other planes in most other simulators), it is almost impossible to stabilize the airplane at some combo of power, altitude and trim. First off the bat, you are missing the feedback of stick forces (unless FFB, of course). I also have the feeling that the Flight Model(s) just don’t do equilibrium very well (even the sim that begins with X and it’s theoretically better FM has this same issue).
So what can you do… I have reduced the trim value in the .lua file from 1.0 to 0.25 and this makes the Mosquito easier to handle certainly. Also, try to fly with the Altimeter, not the Vertical Velocity Indicator, which, if properly modeled, is a lagging indicator (compared to the altimeter which gives real time information). Unfortunately, the Altimeter in the Mosquito is unrealistically jumpy IMHO which makes this more difficult than it should be.