In the wake of the October stock market plunge, Congress is likely to pass a "softer" trade bill than otherwise might have been the case, House Majority Leader Thomas S. Foley (D-Wash.) told reporters yesterday.

Foley said it still is likely that the congressional conference committee working on the legislation will call for stiffer sanctions against unfair trade practices. But the legislation will give the president sufficient discretionary authority over sanctions so that President Reagan will be willing to sign the bill, Foley predicted.

If that happens, it would frustrate the strategy of some congressional Democrats who have sought a tough trade bill, anticipating a presidential veto. If Reagan vetoed such a bill -- and the veto were upheld -- then, these Democrats argue, they would have a good political issue for 1988: They would have shown a desire to protect American industry, foiled by a Republican president.

Foley, who favors a milder bill, said advocates of a confrontation over trade have been losing support recently, reflecting in part the spirit of bipartisanship that led to the deficit reduction package produced last week by White House representatives and congressional leaders of both parties.

The desire for a confrontation over trade has also been cooled by the anxiety that followed last month's stock market drop, Foley said. Hard-liners on the trade issue, Foley said, "are showing a new sensitivity to how the markets would regard a protectionist bill."

Nevertheless, House Speaker Jim Wright (D-Tex.) is reported still to be pressing for strong trade legislation that would send a signal to major trade competitors -- especially Japan -- that the United States demands better treatment for its exporters.

Wright, who is not necessarily trying to provoke a presidential veto, reportedly is upset that the three weeks congressional leaders spent negotiating the budget package further delayed work on the trade bill. His original target was to complete the bill by Oct. 30. Now, the final bill probably won't be sent to the White House until next year.

Foley expressed hope that if "softer" language can be worked out that gives the president full discretion in imposing new trade retaliatory steps, "Japan and West Germany won't jump all over it."

Foreign governments lobbying against the legislation have been unsure of the best strategy. If they support efforts to soften language, they may increase chances that a bill may pass and be signed by the president. If they avoid the battle and a tougher bill passes, it may be vetoed -- thus killing the threat of new trade restrictions.

Moderates such as Foley favor an attempt to soften the trade legislation now so it isn't an issue in next year's campaign.