I use exactly those two flashes so here goes: First you'll be using the Canon Wireless system. You'll need to read the 550's instructions but here's where to start. The 420 needs to be the B Group flash. Leaving the 550 alone will make it default to the A Group. I mention this because it's NOT in the intructions and those instructions imply that the Wireless system can only be use with two external flashes, with the third - a 550 - as a transmitter only. This is not the case but you'd never know it from the Canon literature.
The 550 MUST be used as the Master, as there's no way that the 420 can do that job. The 420 becomes the slave (duh) but it also becomes the MAIN light. The Main can go anywhere (pretty much) and 45 degrees to one side of the subject is as good as any. The Fill light, which the 550 has become, MUST be within 20 degrees of the camera position.
I have my 550 on a bracket so that it is above the lens in both the horizontal and vertical shooting positions. Canon Wireless is a line-of-sight operation so having the 550/Master sitting high up above the camera helps a lot. In fact in vertical shots with the 550 in the hot shoe, I don't see how you could set up the 420 to the camera's right, as the camera & lens would block out the informational pulse.
The face of the 420 should be turned so that it faces the 550. This is line of sight stuff again. If you did aim the face of the 420 at the subject you have another issue. When the 420 is on SLAVE it emits a bright red pulse from the flashes' face, and this pulse would be unbelievably distracting to the subject. The audience, if there is one, would notice as well. The 420 has a sleep mode that can't be shut off, but the blinking red pulse tells you that it is awake. If the red light does stop you have a period of time where a test flash pop from the 550 will turn the 420 on again, but if you wait too long you need to go up to the 420 and turn it off and on again.
Spend some time with the 550's instuctions so you learn how to enable RATIOS. A 3:1 lighting ratio is very common for portaits. But as I've written before you need to select 1:3 on the 550's panel to make this work right. Simply the 420's light will be brighter than the 550's, but by less than a stop, so there's direction to the light, but there's also enough fill in the shadows to keep detail.
I almost NEVER want the Main light to come from the camera position. It's very flat and not even a little bit interesting. You may feel resentful about having to use the weaker 420 as the Main light. It seems a waste of the 550's power. But in fact you almost never will be at the power limits of either flash. In any case that's the way it is.
I set up the 420 on a light stand. I use an "umbrella bracket" to mount the 420 and they are available at B&H for about $15. The bracket has an accessory shoe and pivots so I can aim the flash. In spite of the bracket's fullname I rarely use it with an umbrella! On each side of the 420 I have soft Velcro so I can attach black "flag" cards. The nearest to the camera card blocks the light from coming out "sideways" and prevents flare. I always use this card. The far card will create a snoot of sorts to aim the light, and sometimes I'll take it off if I actually want want spill.
The coolest thing about the Canon wireless is that you now get to control the output of that slaved flash without touching it at all. Through the ratios, which you can change from the shooting position, you can vary the fill to make it lower contrast lighting or have it a high contrast/high ratio. You can even shut off the 550's flash (not to be confused with the 550's informational pulse) for some really dramatic stuff. By using the flags on the 420 I also find that I can put the 420 at some pretty funny angles to the camera. With digital I just try it and look.
Here's a shot that I've done with the 550 as Fill/Master and a 430 as Main/Slave. It's probably a 6:1 ratio (1:6 on the 550. sigh ... )
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"There's never time to do it right. But there's always time to do it over."
Canon 5D, 50D; 16-35 f2.8L, 24-105 f4L IS, 50 f1.4, 100 f2.8 Macro, 70-200 f2.8L, 300mm f2.8L IS.