It's not unusual to come out ahead even despite the enemy having many more troops, if you have better matchups for those troops. For example, the enemy can have twice as many archers as you have light melee, but your light melee can still win.
I would advise you to hold onto your vitality surges, if you get them (they are represented by a red heart) until you are stronger. No sense in wasting them. If your squad size is, say, 50 now and you use a 50 percent vitality surge, you are getting a heck of a lot less troops than if you wait until you're stronger with bigger squad sizes.
I would also advise against spending diamonds to restore your troops. That's a total waste of diamonds that you need to max out your magic academy or get another builder, or whatever. As Lelanya said, that can get pretty expensive pretty fast, for very little gain. While you're at it, make sure you have the "confirm diamond purchase" button on (in your tools at the lower right hand side of your game screen.) You don't want to accidentally use diamonds on something silly like that. When you have "confirm diamond purchase" set, then you'll get a popup warning you if you're about to spend diamonds without realizing it. It sure has saved me money.