Questions about localbitcoin.

I have recently started working with bitcoins. Have been doing a lot of research.

I have a small business and my biggest client always pays with bitcoins.

I have been selling them on localbitcoins for paypal. Usually above market price.

The question I have is how can people afford to do that? Now I understand some of these people are chargeback scammers and money launderers. But I would like to believe they are a very small %. (am i wrong?)

So the people who are trading legit how do they make $ doing that? Whats stopping me from just buying endless btc at market value somewhere and selling it to them all day long? What is the catch here?

Another question I have is what are some steps I can take to protect myself from fraud when dealing with localbitcoins and paypal. Is it even possible?

Thank you ahead of time.