Every scale generates a series of chords formed on each one of it's notes. For example, the scale of C major will give you the following chords: C, Dm, Em, F, G, Am, Bdim, C. The diminished chord is found on the seventh degree of the major scale. In our example (C scale), C D E F G A B C, we have Bdim as the chord formed on the seventh degree of the scale (B).
The diminished chord is formed by consecutive minor thirds and has the following formula: Root (or 1) b3 b5 b7. An easy way to build a diminished chord (on the fretboard that is) is to take a 7th chord half a tone down from the root of the diminished chord. In the example of Bdim, take Bb7.
All you have to do to get Bdim from Bb7 is to raise the root (and only the root) of Bb7 by half a tone. Since Bdim has a b3 b5 and b7, raising the root of Bb7 by half a tone is the same as lowering 3 5 and 7 from B(7) to get Bdim.
This method is valid for minor chord progressions as well. In such a case, you will find the diminished chord on the 2nd and 7th degree of the scale.
For more info on this concept, I am inviting you to take a look at the book: THE ART OF CHORDS available from www.guitar-tracks.com
. See you there.